<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              -------------------
                                    FORM 20-F

                     ANNUAL REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                         COMMISSION FILE NUMBER 0-30852

                              -------------------
                          GRUPO FINANCIERO GALICIA S.A.

             (Exact name of Registrant as specified in its charter)

                             GALICIA FINANCIAL GROUP
                 (Translation of Registrant's name into English)

                              REPUBLIC OF ARGENTINA
                 (Jurisdiction of incorporation or organization)

                          GRUPO FINANCIERO GALICIA S.A.

                          TTE. GRAL. JUAN D. PERON 456

                        C1038 AAJ-BUENOS AIRES, ARGENTINA

                    (Address of principal executive offices)

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12 (b)OF THE ACT:

                                      None

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12 (g)OF THE ACT:

 Class B Ordinary Shares, Ps.1.00 par value, ten shares of which are represented
                          by American Depositary Shares

 SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
                                   OF THE ACT:

                                      None

         Indicate the number of outstanding shares of each of the issuer's
         classes of capital or common stock as of the close of the period
         covered by the Annual Report:

<TABLE>
<S>                                                             <C>
     Class A Ordinary Shares, Ps.1.00 par value .............   281,221,650

     Class B Ordinary Shares, Ps.1.00 par value ..............  811,185,367
</TABLE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow.
                                 Item 17 [ ]   Item 18 [X]

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
PRESENTATION OF FINANCIAL INFORMATION........................................................................     1

PART I.......................................................................................................     4

        ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.......................................     4
        ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.....................................................     4
        ITEM 3.  KEY INFORMATION.............................................................................     4
                 SELECTED FINANCIAL DATA.....................................................................     4
                 EXCHANGE RATE INFORMATION...................................................................    10
                 RISK FACTORS................................................................................    11
        ITEM 4.  INFORMATION ON THE COMPANY..................................................................    24
                 ORGANIZATION................................................................................    24
                 ORGANIZATIONAL STRUCTURE....................................................................    24
                 HISTORY.....................................................................................    26
                 CAPITAL INVESTMENTS AND DIVESTITURES........................................................    26
                 STRATEGY....................................................................................    28
                 INITIATIVES AND INVESTMENTS.................................................................    29
                 BANCO GALICIA...............................................................................    31
                 COMPETITION.................................................................................    49
                 SALES AND MARKETING.........................................................................    52
                 PROPERTY....................................................................................    53
                 SELECTED STATISTICAL INFORMATION............................................................    54
                 INTEREST RATE SENSITIVITY OF OUTSTANDING LOANS AS OF DECEMBER 31, 2002......................    75
                 GOVERNMENT REGULATION.......................................................................    92
                 MAIN REGULATORY CHANGES IN 2002 AND 2003....................................................    93
                 ARGENTINE BANKING REGULATION................................................................   102
        ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS................................................   118
                 GENERAL.....................................................................................   118
                 INFLATION...................................................................................   118
                 DUAL CURRENCY BALANCE SHEET.................................................................   119
                 THE ARGENTINE ECONOMY IN 2002...............................................................   119
                 THE ARGENTINE FINANCIAL SYSTEM IN 2002......................................................   120
                 RESULTS OF OPERATIONS OF GRUPO GALICIA FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND
                     DECEMBER 31, 2001 AND THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000......................   122
                 U.S. GAAP AND ARGENTINE BANKING GAAP RECONCILIATION.........................................   141
                 RESULTS BY SEGMENTS.........................................................................   145
                 TOTAL EXPOSURE TO THE ARGENTINE PUBLIC SECTOR...............................................   150
                 DESCRIPTION OF CONSOLIDATED ASSETS..........................................................   151
                 OFF BALANCE SHEET ARRANGEMENTS..............................................................   154
                 DESCRIPTION OF CONSOLIDATED LIABILITIES.....................................................   157
                 CONTRACTUAL OBLIGATIONS AND CONTINGENT LIABILITIES..........................................   160
                 LIQUIDITY...................................................................................   163
                 CAPITAL.....................................................................................   168
                 CAPITAL EXPENDITURES........................................................................   170
                 CRITICAL ACCOUNTING POLICIES................................................................   170
                 US GAAP - CRITICAL ACCOUNTING POLICIES......................................................   172
        ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..................................................   174
                 OUR BOARD OF DIRECTORS......................................................................   174
                 COMPENSATION OF DIRECTORS...................................................................   175
                 OUR SUPERVISORY COMMITTEE...................................................................   175
                 MANAGEMENT OF GRUPO GALICIA.................................................................   176
                 BOARD OF DIRECTORS OF BANCO GALICIA.........................................................   177
</TABLE>

                                       (i)
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
                 FUNCTIONS OF THE BOARD OF DIRECTORS OF BANCO GALICIA........................................   178
                 BANCO GALICIA'S EXECUTIVE OFFICERS..........................................................   180
                 BANCO GALICIA'S SUPERVISORY COMMITTEE.......................................................   181
                 COMPENSATION OF BANCO GALICIA'S DIRECTORS...................................................   182
                 COMPENSATION OF BANCO GALICIA'S OFFICERS....................................................   182
                 EMPLOYEES...................................................................................   182
                 SHARE OWNERSHIP.............................................................................   183
        ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...........................................   183
                 MAJOR SHAREHOLDERS..........................................................................   183
                 RELATED PARTY TRANSACTIONS..................................................................   185
        ITEM 8.  FINANCIAL INFORMATION.......................................................................   186
                 LEGAL PROCEEDINGS...........................................................................   186
                 DIVIDEND POLICY AND DIVIDENDS...............................................................   187
                 SIGNIFICANT CHANGES.........................................................................   188
        ITEM 9.  THE OFFER AND LISTING.......................................................................   188
                 SHARES AND ADSS.............................................................................   188
                 ARGENTINE SECURITIES MARKET.................................................................   191
                 MARKET REGULATIONS..........................................................................   192
        ITEM 10. ADDITIONAL INFORMATION......................................................................   193
                 DESCRIPTION OF OUR BY-LAWS..................................................................   193
                 EXCHANGE CONTROLS...........................................................................   200
                 TAXATION....................................................................................   201
                 BACKUP WITHHOLDING AND INFORMATION REPORTING................................................   205
                 MATERIAL CONTRACTS..........................................................................   206
                 DOCUMENTS ON DISPLAY........................................................................   206
        ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................................   207
                 BANCO GALICIA...............................................................................   207
        ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......................................   215

PART II......................................................................................................   216

        ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.............................................   216
        ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                   PROCEEDS..................................................................................   217
        ITEM 15. CONTROLS AND PROCEDURES.....................................................................   217
        ITEM 16. [RESERVED]..................................................................................   218

PART III.....................................................................................................   219

        ITEM 17. FINANCIAL STATEMENTS........................................................................   219
        ITEM 18. FINANCIAL STATEMENTS........................................................................   219
        ITEM 19. EXHIBITS....................................................................................   219

CERTIFICATIONS...............................................................................................   222
</TABLE>

                                      (ii)
<PAGE>

                      PRESENTATION OF FINANCIAL INFORMATION

Our consolidated financial statements consolidate the accounts, on a line by
line basis, of Grupo Financiero Galicia S.A. and its subsidiaries. Therefore,
our consolidated financial statements include the accounts of:

-   Grupo Financiero Galicia S.A., the holding company;

-   Sudamericana Holding S.A. and its subsidiaries;

-   Galicia Warrants S.A.;

-   Net Investments S.A. and its subsidiaries; and

-   Banco de Galicia y Buenos Aires S.A., its wholly-owned subsidiary,
    Banco Galicia Uruguay S.A ("Galicia Uruguay") and its subsidiaries, and
    other subsidiaries and affiliated companies required to be
    consolidated, collectively the "Bank" or "Banco Galicia").

In this annual report, references to "we", "our", "us", the "Group" and "Grupo
Galicia", are to Grupo Financiero Galicia S.A. and its consolidated
subsidiaries.

We were formed on September 14, 1999, as a financial services holding company,
to hold all of the shares of capital stock of Banco Galicia held by members of
the Escasany, Ayerza and Braun families. As a result, our only significant asset
at December 31, 1999 was our interest in Banco Galicia. In July 2000, we
conducted an exchange offer whereby we offered to exchange shares of Banco
Galicia for shares of Grupo Galicia. As a result of the exchange offer, our only
significant asset was our 93.23% interest in Banco Galicia. As of December 31,
2002 our interest was 93.59%, as a result of open market purchases. Banco
Galicia is a predecessor entity and Grupo Galicia is the successor entity.

For periods prior to July 1, 2000, the financial statements of Banco Galicia
have been presented for fiscal years ended June 30th. From July 1, 2000, the
financial statements of Grupo Galicia have been presented for the six-month
fiscal year ended December 31, 2000, and for the fiscal years ended December 31,
2001 and 2002.

Grupo Galicia and Banco Galicia maintain their financial books and records in
Argentine pesos and prepare their financial statements to conform to the
accounting rules of the Banco Central de la Republica Argentina (the "Argentine
Central Bank") which prescribes the generally accepted accounting principles for
all banks in Argentina. This annual report refers to those accounting principles
as "Argentine Banking GAAP". Argentine Banking GAAP differs in certain respects
from generally accepted accounting principles in Argentina ("Argentine GAAP").
Argentine Banking GAAP also differs in some respects from generally accepted
accounting principles in the United States. See "Item 5. Operating and Financial
Review and Prospects--U.S. GAAP and Argentine Banking GAAP Reconciliation" for a
description of the principal differences between Argentine GAAP and Argentine
Banking GAAP, and U.S. GAAP for the periods up to December 31, 2002. A
reconciliation to U.S. GAAP of Grupo Galicia net income and total shareholders'
equity is presented for the fiscal years ended December 31, 2002 and 2001 and
for the six-month fiscal year ended December 31, 2000. A reconciliation to U.S.
GAAP of Banco Galicia's net income and total shareholders' equity is presented
for the fiscal year ended June 30, 2000.

The changes to Argentine law and regulations in 2002 have had a significant
impact on the Group's operations. The Group's December 31, 2001 and December 31,
2002 consolidated financial statements have been prepared on the assumption that
we will continue as a going concern and do not include any adjustments that
might result from the outcome of the uncertainty generated by these changes.

In this Annual report, references to "US$" and "dollars" are to United States
dollars and references to "Ps." or "pesos" are to Argentine pesos. Unless this
annual report states otherwise, until December 31, 2001 inclusively, the
exchange rate used to convert foreign currency amounts on the Group's and the
Bank's balance sheets and income statements into pesos was the exchange rate as
of each relevant date or period end that Banco de la Nacion Argentina ("Banco
Nacion") quoted. In the case of dollars, the Banco Nacion quotes for such
exchange rates had been Ps 1.0 = US$1.0, the peso-dollar parity introduced in
1991 by the Convertibility Law. On January 7, 2002, Argentina abandoned the
fixed peso-dollar parity introduced in 1991 by the Convertibility Law. Following
the initial devaluation and the setting of an official rate exchange at Ps.1.4
per US$1.0, the peso was allowed to float.

<PAGE>

At June 20, 2003, the exchange rate was Ps.2.8027 per US$1. Since Argentina is
not servicing its sovereign debt since the end of 2001, such rate may not
accurately reflect the real value of the peso compared to the dollar. The
exchange rate used in the December 31, 2002 consolidated financial statements
was Ps.3.363 per US$1.0, as quoted by the Argentine Central Bank, in accordance
with Communique "A" 3671 from the Argentine Central Bank that established that
beginning with accounting information as of March 4, 2002, inclusively, the
exchange rate to value foreign currency balances had to be the exchange rate
published by such Central Bank.

On August 22, 1995, the government of Argentina published Decree No.316/95,
which eliminated the requirement that financial statements prepared after
September 1, 1995 be restated for inflation. In compliance with such decree and
applicable regulations of the Comision Nacional de Valores (the National
Securities Commission or the "CNV"), the Bank discontinued the adjustment of its
financial statements for inflation. Argentine GAAP provides for adjustment of
financial statements for inflation when the annual variation in the general
level of the wholesale price index (the "WPI") in Argentina published by the
Instituto Nacional de Estadistica y Censos (National Institute of Statistics and
Census, "INDEC") exceeds 8%. Therefore, the Bank's financial statements have not
been adjusted for inflation in each of the fiscal years ended after September 1,
1995 through December 31, 2001, inclusively, because the variation of this price
index was below the above mentioned limit. Given that Grupo Galicia was formed
in 1999, its financial statements have not been adjusted for inflation in each
of the fiscal years ended in December 31, 1999, 2000 and 2001.

Due to the reemergence of inflation in Argentina in 2002, mainly as a result of
the abandonment on January 7, 2002, of the fixed exchange rate of Ps.1.0 per
US$1.0 that had been established by the Convertibility Law in 1991, starting
January 1, 2002, our financial statements and those of the Bank began to be
adjusted for inflation. The restatement for inflation is performed by using the
WPI, in accordance with Argentine Central Bank's Communique "A" 3702, Resolution
No.415/02 of the CNV and Resolution No.240/02 of the Argentine Federation of
Professional Councils in Economic Sciences, the body that establishes Argentine
GAAP, or the "FACPCE".

In this annual report and in the financial statements included in this annual
report, unless stated otherwise, figures for periods prior to December 31, 2002
have been restated in constant Argentine pesos as of December 2002 applying
changes in the WPI for the period from January 1, 2002 to December 31, 2002 that
totaled approximately 118.44% The restatement in constant pesos of December 2002
was performed by using the coefficient 2.1844.

On March 25, 2003, Decree 664/03 rescinded the requirement that financial
statements to be prepared in constant currency, effective for financial periods
on or after March 1, 2003 and on April 8, 2003 the CNV issued resolution No.
443/03 discontinuing inflation accounting as of March 1, 2003. The WPI increased
approximately 7% from January 1, 2003 to February 28, 2003.

Throughout this annual report, references to the "asymmetric pesification" is to
the compulsory "asymmetric" conversion of certain dollar-denominated assets and
liabilities into peso-denominated assets and liabilities at different exchange
rates which occurred in January 2002, and is more fully described in
"Unformation on the Company--Main Regulatory Changes in 2002 and 2003."

Unless otherwise indicated, all market share and other industry information has
been derived from information published by the Argentine Central Bank.

This annual report contains forward-looking statements that involve substantial
risks and uncertainties, including, in particular statements about our plans,
strategies and prospects under the captions "Item 5. Operating and Financial
Review and Prospects." All statements other than statements of historical facts
contained in this annual report including statements regarding our future
financial position, business strategy, budgets, projected costs and plans and
objectives of management for future operations, are forward-looking statements.
In addition, forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue" or the negative thereof or
variations thereon or similar terminology. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, we do
not provide any assurance with respect to such statements. Because such
statements are subject to risks and uncertainties, actual results may differ
materially and adversely from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially and
adversely include, but are not limited to:

                                       -2-
<PAGE>
        -     the decision by the Bank's board of directors and the Bank's
              senior management to cease payment on its debt, and the outcome of
              the restructuring of the Bank's debt;

        -     the severity and persistence of the current economic crisis in
              Argentina which has had and could continue to have a profound
              adverse effect on us and the Argentine financial system;

        -     changes in general economic, business, political, legal, social or
              other conditions in Argentina or Latin America;

        -     changes in capital markets in general that may affect policies or
              attitudes toward lending to Argentina or Argentine companies;

        -     our inability to obtain additional debt or equity financing on
              attractive terms which will limit our ability to fund existing
              operations and to finance new activities; and

        -     the other factors discussed under "Risk Factors" in this annual
              report.

You should not place undue reliance on such statements, which speak only as of
the date that they were made. These cautionary statements should be considered
in connection with any written or oral forward-looking statements that we may
issue in the future. We do not undertake any obligation to release publicly any
revisions to such forward-looking statements after completion of this annual
report to reflect later events or circumstances or to reflect the occurrence of
unanticipated events.

                                       -3-
<PAGE>

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

SELECTED FINANCIAL DATA

         -        The following table presents summary historical financial and
         other information for Grupo Galicia and Banco Galicia as of the dates
         and for the periods indicated restated in constant Argentine pesos as
         of December 31, 2002 applying changes in the WPI for the period from
         January 1, 2002 to December 31, 2002 that totaled approximately
         118.44%.

         -        The selected consolidated financial information as of and for
         the years ended December 31, 2002 and 2001 and for the six-month period
         ended December 31, 2000 has been derived from our audited consolidated
         financial statements included in this annual report.

         -        The selected consolidated financial information as of and for
         the three years ended June 30, 2000 has been derived from the Banco
         Galicia audited consolidated financial statements.

         -        We and Banco Galicia prepare financial statements in
         accordance with Argentine Banking GAAP which differs from Argentine
         GAAP and U.S. GAAP. Our audited consolidated financial statements
         contain a reconciliation to Argentine and U.S. GAAP of our
         shareholders' equity as of December 31, 2002 and 2001 and our net
         income for the two years ended December 31, 2002 and the six months
         period ended June 30, 2000. See note 38 and 39 of our audited
         consolidated financial statements included in this annual report

         -        Effective September 1, 1995, pursuant to Decree No.316/95, we
         discontinued our prior practice of adjusting our financial statements
         for inflation. Effective January 1, 2002, however, as a result of the
         application of Argentine Central Bank's Communique "A" 3702, Resolution
         No.415/02 of the CNV and Resolution No.240/02 of the FACPCE, we resumed
         the application of the adjustment for inflation. To this end, we
         followed the restatement method established by Technical Pronouncement
         No.6 of the FACPCE using the WPI. The adjustments resulting from the
         changes in the purchasing power of the peso between January 1, 2002 and
         December 31, 2002 are stated in the currency value as of December 2002.

         -        In 2002, Argentina experienced a high rate of inflation. The
         WPI increased approximately 118.44% in 2002. Argentine GAAP requires
         financial statements to be adjusted for inflation when the increase in
         the WPI exceeds 8% per annum. Accordingly, our audited consolidated
         financial statements as of and for the year ended December 31, 2002
         have been adjusted for inflation and restated in constant pesos as of
         December 31, 2002. In addition, for comparative purposes, unless
         otherwise specified, we have also restated in constant pesos as of
         December 31, 2002 applying changes in the WPI for the period from
         January 1, 2002 to December 31, 2002 all other financial data included
         elsewhere in this annual report.

         -        On March 25, 2003, Decree No.664/03 rescinded the requirement
         that financial statements be prepared in constant currency, effective
         for financial periods on or after March 1, 2003 and on April 8, 2003
         the CNV issued resolution No.443/03 discontinuing inflation accounting
         as of March 1, 2003. The WPI increased 0.81% from January 1, 2003 to
         February 28, 2003.
                                       -4-
<PAGE>

         -        The following data should be read in conjunction with "Item 5.
         Operating and Financial Review and Prospects" and our audited
         consolidated financial statements.

                                       -5-
<PAGE>

<TABLE>
<CAPTION>
                                                         GRUPO FINANCIERO GALICIA,                     BANCO GALICIA,
                                             ------------------------------------------  ---------------------------------------
                                                 FISCAL YEAR ENDED       6 MONTHS ENDED             FISCAL YEAR ENDED
                                             -------------------------   --------------  ---------------------------------------
                                                      DECEMBER 31,        DECEMBER 31,                   JUNE 30,
                                             -------------------------   --------------  ---------------------------------------
                                                 2002          2001          2000           2000           1999         1998
--------------------------------------------------------------------------------------------------------------------------------

                                                   (in millions of December 31, 2002, constant pesos, except as noted)(1)
<S>                                          <C>           <C>           <C>             <C>           <C>           <C>
CONSOLIDATED INCOME STATEMENT
Financial Income............................ Ps. 5,747.6   Ps. 3,555.8   Ps.  1,791.7    Ps. 3,275.3   Ps. 2,772.2   Ps. 2,353.7
Financial Expenses..........................     4,521.0       2,107.7          967.2        1,696.0       1,521.7       1,406.8
Net Financial Income (2)....................     1,226.6       1,448.1          824.5        1,579.3       1,250.5         946.9
Provision for Losses on Loans and Other
Receivables.................................     1,634.3         999.8          270.0          545.0         471.8         185.2
Net Income from Services (3)................       372.2         934.5          417.9          747.7         642.7         503.5
Monetary Loss from Financial Intermediation.    (1,425.3)            -              -              -             -             -
Administrative Expenses.....................       939.3      1 ,358.1          659.5        1,327.3       1,227.2       1,035.9
Monetary Gain (Loss) from Operating
  Expenses..................................        20.8             -              -              -             -             -
Minority Interest...........................       267.2         (22.0)         (13.8)           0.7         (23.8)         (3.7)
Income from Equity in other Companies.......       (51.5)         34.7           (9.7)         (12.0)        281.6          60.1
Miscellaneous Income (Loss), Net (4)........      (425.8)        382.6           21.4           60.1          35.4           7.4
Monetary Gain (Loss) from other
  Transactions..............................      (161.7)            -              -              -             -             -
Income before Taxes.........................    (2,751.1)        420.0          310.8          503.5         487.4         293.1
Income Tax..................................       (65.9)       (157.7)        (114.4)        (162.1)       (158.4)        (43.4)
Net Income before the Absorption............    (2,817.0)        262.3          196.4          341.4         329.0         249.7
Absorption subject to the Approval of the
 Annual Shareholders Meeting.................    1,358.2             -              -              -             -             -
Net Income after the Absorption.............    (1,458.8)        262.3          196.4          341.4         329.0         249.7
Adjusted Net Income per Share (in Pesos)
  (**)......................................      (1.335)        0.240          0.192          0.291         0.282         0.214
Cash Dividends per Share (in Pesos).........           -             -              -            0.4           0.2           0.2
Book Value per Share (in Pesos).............       1.487         2.816          2.818          2.265         2.257         2.029
Stock Dividends per Share (in Pesos)........           -             -              -              -           0.4           0.2
AMOUNTS IN ACCORDANCE WITH U.S. GAAP
Net Income (loss)........................... Ps.   418.8   Ps.(8,563.7)  Ps.    214.7    Ps.   358.3   Ps.   326.4   Ps.   152.5
Adjusted Net Income (loss) per Share........       0.383        (7.839)         0.210          0.306         0.280         0.131
Book Value (deficit) per Share..............      (4.921)       (5.343)         2.606          2.261         1.900         1.787
Financial Income............................     2,590.5       3,538.5        1,797.8        3,268.8       2,757.4       2,278.1
Net Financial Income .......................    (1,930.5)      1,431.7          830.5        1,572.8       1,235.7         871.1
Provision for Losses on Loans and Other
Receivables ................................       920.8       4,690.1          258.9          509.7         502.9         205.3
Income Tax..................................        65.9         211.1          101.6          144.7          93.9          40.4
CONSOLIDATED BALANCE SHEET
Cash and Due from Banks..................... Ps.   571.9   Ps. 1,130.0   Ps.  1,354.6    Ps. 1,366.1   Ps. 1,731.2   Ps. 2,145.8
Government Securities, Net..................     1,811.1         270.9          168.6          898.2       1,477.3       2,203.0
Loans, Net .................................    10,589.8      19,933.4       20,187.1       20,373.7      18,450.5      16,640.0
Total Assets................................    23,697.9      27,636.7       36,569.6       35,129.2      29,972.0      28,401.4
Deposits....................................     5,164.3      13,386.1       19,449.6       19,099.7      17,148.6      15,600.9
Other Funds (5).............................    16,909.1      11,173.9       14,234.8       13,119.6      10,178.7      10,422.5
Total Shareholders' Equity..................     1,624.5       3,076.7        2,885.2        2,909.9       2,644.7       2,378.0
Average Total Assets (6)....................    29,245.9      31,691.1       33,141.1       30,501.9      27,804.8      26,697.5
PERCENTAGE OF PERIOD-END BALANCE SHEET ITEMS
DENOMINATED IN DOLLARS:
Loans, Net of Allowances....................        9.11%        86.34%         79.85%         77.55%        75.70%        77.58%
Total Assets................................       43.30         80.05          75.65          74.20         72.08         72.20
Deposits....................................       40.08         81.15          70.61          69.43         65.81         65.58
Total Liabilities...........................       43.97         74.07          79.06          78.56         75.20         77.13
AMOUNTS IN ACCORDANCE WITH U.S. GAAP
Trading Securities.......................... Ps.    35.2   Ps.   140.7   Ps.    226.7    Ps.   850.8   Ps.   973.4   Ps. 2,197.7
Available-for-Sale Securities...............     1,368.7       2,889.1        4,339.6        3,627.2       3,960.8       3,520.8
Total Assets................................    14,733.9      20,879.8       32,513.8       31,902.8      28,633.8      28,753.3
Total Liabilities...........................    20,109.4      26,716.8       29,845.1       29,254.6      26,407.7      26,659.1
Shareholders' Equity (Deficit)..............    (5,375.5)     (5,837.0)       2,668.7        2,648.2       2,226.1       2,094.2
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</TABLE>

                                       -6-
<PAGE>

<TABLE>
<CAPTION>
                                                            GRUPO FINANCIERO GALICIA,                     BANCO GALICIA,
                                                ------------------------------------------  ---------------------------------------
                                                    FISCAL YEAR ENDED       6 MONTHS ENDED             FISCAL YEAR ENDED
                                                -------------------------   --------------  ---------------------------------------
                                                         DECEMBER 31,        DECEMBER 31,                   JUNE 30,
                                                -------------------------   --------------  ---------------------------------------
                                                    2002          2001          2000           2000           1999         1998
                                                -----------   -----------   --------------  -----------   -----------  ------------
<S>                                             <C>           <C>           <C>             <C>           <C>          <C>
SELECTED RATIOS
RATIOS IN ACCORDANCE WITH ARGENTINE GAAP
PROFITABILITY AND EFFICIENCY
 Net Yield on Interest Earning Assets (7)(*)           3.66%         6.54%             5.98%       6.18%         5.80%         4.46%
 Interest Spread, Nominal Basis (8)(*).........        0.82          5.56             5.14         5.35          5.22          3.96
 Net Yield on Interest Earning Assets, Real
 Basis (9).....................................       (6.41)         6.54             5.98         6.18          5.80          4.46
 Financial Margin (10)(*)......................        4.34          5.36             5.88         6.07          5.22          4.07
 Return on Average Assets (11)(*)..............       (5.90)         0.90             1.27         1.12          1.18          0.93
 Return on Average Shareholders' Equity (12)
  (*)..........................................      (60.51)         8.67            14.68        12.41         13.32         11.46
 Net Income from Services as a Percentage of
  Operating Income (13)........................       24.30         39.22            33.64        32.13         33.94         34.71
 Net Income from Services as a Percentage of
  Administrative Expenses......................       40.52         68.81            63.37        56.34         52.37         48.61
 Efficiency ratio (14).........................       59.97         57.00            53.09        57.04         64.82         71.42
CAPITAL
 Shareholders' Equity as a Percentage of
  Total Assets.................................        6.86%        11.13%            7.89%        8.28%         8.82%         8.37%
 Tangible Shareholders' Equity as a Percentage
  of Total Assets (15).........................        5.51          9.35             6.88         7.36          7.84          7.24
 Total Liabilities as a Multiple of
 Shareholders' Equity..........................      13.59x         7.98x           11.68x       11.07x        10.33x        10.94x
 Total Capital Ratio...........................           -         17.18%           15.26%       17.34%        13.08%        14.26%
 Excess Capital over Minimum Capital Required
 Excluding the Convertible Securities as a
 Percentage of Minimum Capital Required (16)...           -         42.31            27.73        45.13         12.66         22.59
LIQUIDITY
 Cash and Due from Banks as a Percentage of
  Total Deposits...............................       11.07%         8.44%            6.96%        7.15%        10.10%        13.75%
 Liquid Assets (17) as a Percentage of Total
 Deposits......................................       50.06         14.24            27.11        29.92         30.98         39.93
 Loans, Net as a Percentage of Total Assets....       44.69         72.13            55.21        58.00         61.56         58.59
CREDITS QUALITY
Past Due Loans (18) as a Percentage of
Total Loans ...................................        9.93%         4.96%            3.46%        3.40%         3.67%         3.31%
 Non Accrual Loans (19) as a Percentage of
   Total Loans.................................       13.08          6.74             4.04         3.95          4.51          4.08
 Allowance for Loan Losses as a Percentage
  of Total Loans Excluding Interbank Loans.....       13.84          5.08             3.04         2.92          3.46          3.13
 Non Accrual Loans (19) as a Percentage of
  Total Loans Excluding Interbank Loans........       13.25          6.87             4.33         4.23          5.07          4.60
 Allowance for Loan Losses as a Percentage of
  Non-Accrual Loans (19) ......................      104.45         73.94            70.40        69.07         68.24         67.96
 Net Charge-Offs (20).......................... Ps.   286.0   Ps.   436.1       Ps.  214.3  Ps.   507.4   Ps.   401.5  Ps.    152.8
 Net Charge-Offs (20) as a Percentage of
  Average Loans................................        1.89%         2.20%            2.20%        2.80%         2.44%         1.01%
RATIOS IN ACCORDANCE WITH U.S. GAAP
 Capital
 Shareholders' Equity (deficit) as a
  Percentage of Total Assets...................      (36.48)%      (27.96)%            8.21%       8.30%         7.77%         7.28%
 Tangible Shareholders' Equity (deficit) as a
  Percentage of Total Assets...................      (38.14)       (29.34)             7.37        7.57          7.02          6.39
 Total Liabilities as a Multiple of Total
  Shareholders'Equity..........................     (3.74)x       (4.58)x            11.18x      11.05x        11.86x        12.73x
 Liquidity
 Loans, Net as a Percentage of Total Assets....       54.88%        61.11%            62.07%      63.79%        64.23%        57.78%
 Credit Quality
 Allowance for Loan Losses as a Percentage of
  Loans Excluding Interbank Loans..............       23.69         31.01             3.16         3.09          3.86          3.37
 Allowance for Loan Losses as a Percentage of
  Non-Accrual Loans............................      179.55        413.51            72.99        73.07         76.21         73.34
INFLATION AND EXCHANGE RATE
 Inflation (Deflation) (21) (22)...............      118.44%        (4.30)%          (0.55)%       4.51%         5.14%         2.04%
 Currency Devaluation Rate (22)(%).............      236.30             -                -            -             -             -
 CER (23)......................................       40.53             -                -            -             -             -
 CVS (24)......................................        0.83             -                -            -            -              -
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       -7-

<PAGE>

(*)      Annualized for the six-month period ended December 31,2000.

(**)     Before the loss absorption mechanism established by Communique "A"
         3800, net income per share for FY 2002 was (2.579).

(1)      All amounts in December 2002 constant pesos, except inflation,
         percentages, ratios, multiples and per share data.

(2)      Net Financial Income mainly represents income from interest on loans
         and other receivables from financial brokerage plus net income from
         government and corporate debt securities, including gains and losses,
         less interest on deposits and other liabilities from financial
         internediation and the monetary loss from financial brokerage.

(3)      Income from services net of expenditures from services.

(4)      Miscellaneous income less miscellaneous losses.

(5)      Includes mainly liabilities with the Argentine Central Bank, other
         banks and international entities and negotiable obligations.

(6)      The average balances of assets and liabilities, including the related
         interest receivable and payable are calculated on a daily basis for
         Banco Galicia and for Galicia-Uruguay and on a monthly basis for
         Tarjetas Regionales S.A., the regional credit card companies in which
         the Bank holds majority interests, the holding company Grupo Financiero
         Galicia S.A. and its non-banking subsidiaries.

(7)      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."

(8)      Represents the difference between the average nominal interest rates
         earned on interest-earning assets and the average nominal interest
         rates paid on interest-bearing liabilities.

(9)      Net interest earned divided by interest-earning assets, adjusted for
         the effects of inflation and currency fluctuations. For a description
         of net interest earned, see "Item 4. Information on the
         Company--Selected Statistical Information--Interest-Earning Asset--Net
         Yield on Interest-Earning Assets." In compliance with applicable
         regulations, the Bank's financial statements have not been adjusted for
         inflation in each of the fiscal years ended after September 1, 1995,
         and up to December 31, 2001, inclusively.

(10)     Financial margin represents net financial income plus monetary loss
         from financial intermediation plus unrealized valuation difference
         divided by average interest-earning assets. Before the loss absorption
         mechanism allowed by Argentine Central Bank's Comuniques "A" 3800, the
         financial margin for FY 2002 was (0.74)%.

(11)     Net Income plus minority interest plus unrealized valuation difference
         as a percentage of average total assets. Before the loss absorption
         mechanism allowed by Communique "A" 3800, for FY 2002 this ratio was
         (10.55)%.

(12)     Net Income plus unrealized valuation difference as a percentage of
         average shareholders' equity. Before the loss absorption mechanism
         allowed by Communique "A" 3800, for FY 2002 this ratio was (116.84)%.

(13)     Operating income is defined as net financial income plus net income
         from services plus monetary loss from financial intermediation. .
         Before the loss absorption mechanism allowed by Argentine Central
         Bank's Comuniques "A" 3800, this ratio for FY 2002 was 214.52%.

                                      -8-
<PAGE>

(14)     Administrative expenses net of monetary gain (loss) from operating
         expenses as a percentage of operating income. Before the loss
         absorption mechanism allowed by Argentine Central Bank's Comuniques "A"
         3800, this ratio for FY 2002 was 529.39%.

(15)     Tangible shareholders' equity is defined as shareholders' equity minus
         intangible assets.

(16)     Until March 1998, a total of Ps. 331.6 million of the Banco Galicia's
         excess capital was represented by Banco Galicia's 7% Convertible
         Subordinated Negotiable Obligations due 2002 (the "Convertible
         Securities"). On September 19, 1998 a total of Ps 326.1 million of the
         Convertible Securities were converted into Banco Galicia's Class B
         Shares and Ps. 5.5 million were redeemed.

(17)     Liquid assets include cash due from banks, government securities,
         certificates of deposits acquired to the Argentine Central Bank, and
         placements with correspondent banks.

(18)     Past due loans consist of amounts of entire loan principal and interest
         receivable for those loans for which either the principal or any
         interest payment is 91 days or more past due

(19)     Non-accrual loans are defined as those loans in the categories under
         the Argentine Central Bank's classification: (a) consumer: defective
         fulfillment, difficulty in recovery, uncollectible and uncollectible
         for techical reasons and (b) commercial: with problems, high risk of
         insolvency, uncollectible or uncollectible for technical reasons.

(20)     Charge-offs plus direct charge-offs minus bad debts recovered.

(21)     As measured by changes in the Wholesale Price Index in Argentina.

(22)     Source: Instituto Nacional de Estadisticas y Censos (National Bureau of
         Statistics and Census, INDEC).

(23)     The "CER" is the "coeficiente de estabilizacion de referencia", an
         inflation adjustment coefficient based on changes in the consumer price
         index, which became effective as from February 3, 2002.

(24)     The "CVS" is the "coeficiente de variacion salarial", an adjustment
         coefficient based on the variation of salaries, which became effective
         as from October 1, 2002.

                                      -9-
<PAGE>

EXCHANGE RATE INFORMATION

From April 1, 1991, when Law No. 23,928 and Decree No. 529/91 (together referred
to as the Convertibility Law) became effective, through January 7, 2002, the
peso had been freely convertible into U.S. dollars substantially on a one-to-one
basis. Pursuant to the Convertibility Law, the Argentine Central Bank was
required to (1) maintain a reserve in foreign currencies, gold and certain
public bonds denominated in foreign currency equal to the amount of the
outstanding Argentine monetary base and (2) sell U.S. dollars to any person who
so required at a rate of one peso per dollar. In addition, the Argentine Central
Bank had adopted a policy of purchasing U.S. dollars at a rate of Ps.1.00 per
US$1.00, and on January 12, 1995, the Argentine Central Bank had issued
Communique "A" 2298 which provided that all exchange transactions made with the
Argentine Central Bank were to be made at a rate of Ps.1.00 per US$1.00.

On January 6, 2002, Congress enacted the Public Emergency and Foreign Exchange
System Reform Law No. 25,561 (the "Public Emergency Law"), ending ten years of
one-to-one dollar-peso parity under the Convertibility Law. The Public Emergency
Law granted the Executive Branch the power to set the exchange rate between the
peso and foreign currencies and to issue regulations related to the foreign
exchange market. On the same day, the Executive Branch established a dual
exchange rate system, with an "official" market where the exchange rate was
fixed at Ps.1.4 per US dollar for transactions subject to Argentine Central Bank
approval and import and export transactions, and another exchange rate for all
other transactions that was to be freely determined by the market.

On January 11, 2002, after the Argentine Central Bank ended the banking and
foreign-exchange market holiday that it had imposed on December 21, 2001, Banco
Nacion published its first free market exchange rate at Ps.1.6 per US dollar.
Heightened demand for scarce dollars, caused by uncertainty and by the lack of
any other investment alternatives within the "corralito", led the peso to trade
well below the Ps.1.4 per dollar exchange rate used by the government. The peso
continued to fluctuate significantly and, on February 3, 2002, the Executive
Branch announced the elimination of the dual exchange rate in favor of a single
floating rate for all transactions. On the same day, another banking holiday was
imposed preventing the conversion of pesos until February 11, 2002. See "Item 4.
Information on the Company--Main Regulatory Changes in 2002 and 2003--Foreign
Exchange and Monetary System."

Since February 11, 2002, the government and the Argentine Central Bank took
various measures intended to increase the supply of dollars in the foreign
exchange market and thereby limit the depreciation of the peso. However, the
peso continued to loose ground against the dollar until mid 2002. As of June 30,
2002, according to Banco Nacion's quotations, the exchange rate was
approximately Ps.3.80 per US dollar. Beginning in the second half of 2002, the
policy of combining the sale of international reserves with the tightening of
controls over the foreign exchange market and capital movements, succeeded in
stabilizing the peso. The exchange rate began to decrease even while the
Argentine Central Bank began to recover international reserves steadily. By the
end of 2002, the exchange rate fluctuated around Ps.3.4 per US dollar.

In 2003, the peso continued to appreciate, as a result of the stabilization of
the economy and the fact that demand for US dollars in the foreign exchange
market is low, given that Argentina is not servicing most of its foreign debt
after it suspended its debt payments in December 2001 and the private sector
debt with foreign creditors is mostly undergoing renegotiation processes. In
addition, the supply of foreign exchange is high, given there is a low level of
imports and the trade surplus is at a historically high level. See "Item 3. Key
Information--Risk Factors--An excessive appreciation of the peso could create
more recession, renewed pressures in the foreign exchange market and financial
losses to economic agents, including the Bank, with net asset foreign currency
positions."

The following table sets forth, for the periods indicated, the high, low,
average and period-end exchange rates for the purchase of U.S. dollars,
expressed in nominal pesos per US dollar.

                                      -10-
<PAGE>

<TABLE>
<CAPTION>
                                             -------------------------------------------------------------------------
                                                                         EXCHANGE RATE(1)
                                             -------------------------------------------------------------------------
                                                HIGH                   LOW              AVERAGE(2)        PERIOD-ENDED
                                             -------------------------------------------------------------------------
<S>                                          <C>                   <C>                  <C>               <C>
1998................................         Ps.  1.0000           Ps.  1.0000          Ps.  1.0000       Ps.  1.0000
1999................................              1.0000                1.0000               1.0000            1.0000
2000................................              1.0000                1.0000               1.0000            1.0000
2001................................              1.0000                1.0000               1.0000            1.0000
2002................................              3.9000                1.0000               3.0724            3.3630
December 2002.......................              3.5875                3.3630               3.4902            3.3630
January 2003........................              3.3625                3.0633               3.2582            3.1817
February 2003.......................              3.2317                3.0848               3.1632            3.2013
March 2003..........................              3.2187                2.8710               3.0747            2.9625
April 2003..........................              2.9792                2.8295               2.8946            2.8295
May 2003............................              2.9500                2.7485               2.8357            2.8632
June 2003..........................               2.8468                2.7615               2.8089            2.8075
</TABLE>

(1)      Until December 2001, inclusively the source is Banco Nacion. Beginning
         March 2002 the source is the Argentine Central Bank.

(2)      Based on monthly average exchange rates.

From 1989 to November 30, 2001, there were no foreign exchange controls
preventing or restricting the conversion of pesos into U.S. dollars and
transfers abroad. However, on December 3, 2001, the government introduced
controls over the foreign exchange market and transfers of foreign currency
abroad. In late 2002, the government began to gradually release its controls
over the foreign exchange market and capital movements. In May 2003, controls
over the foreign exchange market were eliminated to a large extent.

As of December 31, 2002, despite a certain easing of the restrictions imposed on
the foreign exchange market, the transfer of funds abroad to effect payments of
principal of debts of a financial nature by financial institutions continued to
require the prior approval of the Argentine Central Bank, except in the case of
new indebtedness corresponding to transactions executed through the free foreign
exchange market after February 2, 2002 and payment obligations with
international credit agencies. In May 2003, this prerequisite was eliminated for
financial institutions without financial assistance from the Argentine Central
Bank for liquidity reasons. In the case of the Bank, the transfer of funds
abroad for the payment of principal of debts of a financial nature continues to
require the prior authorization of the Argentine Central Bank. See "Item 4.
Information on the Company--Main Regulatory Changes in 2002 and 2003--Foreign
Exchange and Monetary System."

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, IN ADDITION TO THE
OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT. WE ALSO MAY FACE RISKS AND
UNCERTAINTIES THAT ARE NOT PRESENTLY KNOWN TO US, OR THAT WE CURRENTLY DEEM
IMMATERIAL, WHICH MAY IMPAIR OUR BUSINESS. IN GENERAL, YOU TAKE MORE RISK WHEN
YOU INVEST IN THE SECURITIES OF ISSUERS IN EMERGING MARKETS SUCH AS ARGENTINA
THAN WHEN YOU INVEST IN THE SECURITIES OF ISSUERS IN THE UNITED STATES AND
CERTAIN OTHER MARKETS.

                     RISK FACTORS RELATING TO GRUPO GALICIA

WE ARE A HOLDING COMPANY AND OUR ABILITY TO PAY CASH DIVIDENDS DEPENDS ON THE
PROFITABILITY OF OUR SUBSIDIARIES

We are a holding company and as such we conduct all of our operations through
our subsidiaries. As a holding company, dividends or other inter-company
transfers of funds from our subsidiaries are expected to be our primary source
of funds to pay our expenses and dividends. While we do not anticipate
conducting operations at the holding company level, any expenses we incur, in
excess of minimum levels, which cannot be otherwise financed, will reduce
amounts available to be distributed to our shareholders. The ability of our
subsidiaries to pay dividends and make other payments to us will depend on their
results of operations and financial condition and may be restricted by, among
other things, applicable corporate and other laws and regulations and agreements
of such subsidiaries. In addition, our ability to pay dividends will be subject
to legal and other requirements at the holding company level.

                                      -11-
<PAGE>

During 2002, due to Banco Galicia's adverse financial condition, we did not
receive any dividends from Banco Galicia. Banco Galicia is currently prohibited
from paying any cash dividends or making any advances, loans or capital
contributions to us, its other affiliates or subsidiaries for so long as the
Argentine Central Bank's financial assistance is outstanding. Furthermore, Banco
Galicia is further restricted in paying dividends since it is required to adjust
its earnings to be distributed as cash dividends with the difference begtween
the market value and the carrying value of the compensatory and hedge bonds,
which bonds are described in this annual report, after netting the legal reserve
and other reserves established by Banco Galicia's by-laws. Consequently, our
ability to distribute cash dividends to our shareholders has been, and continues
to be, materially and adversely affected. See "Item 8. Financial
Information--Dividends--Grupo Galicia--Dividend Policy and Dividends."

WE INTEND TO PURSUE NEW LINES AND EXPAND EXISTING LINES OF BUSINESS WHICH WE
CANNOT BE CERTAIN WILL BE AS PROFITABLE AS CURRENT OPERATIONS

We expect to continue to pursue new lines of finance-related businesses and to
expand on existing ones. We cannot be certain that we will be successful or that
these new or expanded businesses will be as profitable as our current
operations. In addition, we will need to compete with entities with which we
have not competed before or which might have more experience and a more in-depth
and proven track record than we do. In addition, these competitors, particularly
foreign companies, might have greater financial resources to expand their
businesses than we do.

WE MAY OPERATE FINANCE-RELATED BUSINESSES THAT HAVE LITTLE OR NO REGULATORY
SUPERVISION WHICH MAY BE RISKY

We may operate finance-related businesses outside of Banco Galicia that are not
regulated by the Argentine Central Bank. These businesses will be subject only
to those regulatory limitations which may be applicable to them. We cannot be
certain that Grupo Galicia will not enter into businesses that have little or no
regulatory supervision or that are riskier than the existing businesses of Banco
Galicia.

WE ARE SUBJECT TO DIFFERENT CORPORATE DISCLOSURE AND ACCOUNTING STANDARDS WHICH
MAY LIMIT THE INFORMATION AVAILABLE TO OUR SHAREHOLDERS

A principal objective of the securities laws of the United States, Argentina and
other countries is to promote full and fair disclosure of all material
information of companies issuing securities. However, there may be less publicly
available information about us than is regularly published by or about listed
companies in certain countries with highly developed capital markets, such as
the United States. While we are subject to the periodic reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
periodic disclosure required of non-U.S. issuers under the Exchange Act is more
limited than the periodic disclosure required of U.S. issuers. Furthermore, we
are not required to comply with the SEC's proxy rules in connection with
shareholders meetings.

We maintain our respective financial books and records in pesos and prepare our
respective financial statements in conformity with Argentine Banking GAAP, which
differs in certain respects from Argentine GAAP and U.S. GAAP.

SHAREHOLDERS MAY BE SUBJECT TO LIABILITY FOR CERTAIN VOTES OF THEIR SECURITIES

Shareholders are not liable for the company's obligations. Shareholder's
liability is limited to the payment of the shares they subscribe. However,
shareholders who have a conflict of interest with a company and do not abstain
from voting may be held liable for damages to the company. Also, shareholders
who willfully or with negligence voted in favor of a resolution that is
subsequently declared void by a court as contrary to Argentine law or the
company's by-laws, may be held liable for damages to the company or to other
third parties, including other shareholders.

In order to vote Class B shares underlying ADSs, a shareholder must either
withdraw the shares from our ADR facility or ask the depositary to vote the
shares according to his or her instructions. A shareholder may not receive
notice of a shareholders' meeting in sufficient time to instruct the depositary
or to withdraw his or her shares. If a

                                      -12-
<PAGE>

shareholder does not vote directly or instruct the depositary, the depositary
will give a proxy to vote his or her Class B shares to a person designated by
Grupo Galicia.

In accordance with the Argentine Commercial Companies Law and applicable
regulations, any shareholder who votes against certain actions or does not
attend (whether in person or by proxy) the relevant shareholders' meeting may
exercise his appraisal rights, provided that the shareholder exercises his
rights within prescribed time periods. However, because of the absence of legal
precedent as to whether a shareholder who has voted both for and against a
proposal (such as the depositary for our ADSs) may exercise appraisal rights
with respect to those shares voted against the proposal, there is doubt as to
whether holders of our ADSs will be able to exercise appraisal rights either
directly or through the depositary with respect to our Class B shares
represented by ADSs unless they exchange their ADSs for our Class B shares prior
to the relevant shareholders' meeting.

GALICIA RETIRO COMPANIA DE SEGUROS S.A., OUR SUBSIDIARY, COULD FACE ADVERSE
FINANCIAL CONSEQUENCES IN THE EVENT THAT CERTAIN OF ITS CUSTOMERS DO NOT ACCEPT
A REPROGRAMMING OF THEIR ACCOUNTS.

Our indirect insurance subsidiary, Galicia Retiro Compania de Seguros S.A.,
could face adverse financial consequences if a significant number of its
customers do not approve a reprogramming of their annuities originally issued in
dollars.

In order to address the adverse financial consequences caused by the "asymmetric
pesification" of dollar-denominated liabilities and assets of Galicia Retiro,
Galicia Retiro has submitted to the Argentine Superintendency of Insurance a
plan to reprogram the repayment schedule of its dollar-denominated annuities
that were affected by the "asymmetric pesification" in order to avoid a
potential liquidity shortfall in the repayment of such liabilities. Such plan
was approved by the Argentine Superintendency of Insurance on June 12, 2003. On
June 30, 2003, Galicia Retiro launched its exchange offer for the reprogrammig,
which expires on July 31, 2003. There can be no assurance that a significant
number of the affected customers will agree to such reprogramming, which, if
such reprogramming is not successful, will result in adverse financial
consequences to Galicia Retiro.

Additionally, the legal regime in Argentina is inconsistent as it relates to
whether such liabilities, so affected by the "asymmetric pesification", must be
repaid in dollars on a current basis or repaid in pesos, with some courts
permitting the repayment in dollars on a current basis. There can be no
assurance that a significant number of the affected customers of Galicia Retiro
will accept the above-mentioned plan rather than seek legal redress, which may
result in adverse financial consequences to Galicia Retiro.

ADVERSE MARKET CONDITIONS ARE ALSO HAVING A NEGATIVE IMPACT ON OUR NON-BANKING
BUSINESSES

In addition to the negative impact that the package of economic measures adopted
during 2002 have had on Banco Galicia, such measures have deeply affected the
general business environment in Argentina and its level of activity. Although,
each of our subsidiaries has been affected differently by the difficult
financial conditions in Argentina (and the region as a whole), depending on its
particular business activity, some effects have been experienced by all and all
of such effects have been adverse. For a discussion on the negative impact of
these economic measures on Banco Galicia, see "Item 3. Key Information--Risk
Factors--Risk Factors Relating to Banco Galicia."

                       RISK FACTORS RELATING TO ARGENTINA

Most of our operations, property and customers are located in Argentina.
Accordingly, the quality of our assets, our financial condition and results of
operations depend primarily on macroeconomic and political conditions prevailing
in Argentina.

ARGENTINA'S POLITICAL AND ECONOMIC INSTABILITY IS STILL HIGH AND COULD AFFECT
THE ECONOMY

Following a period in which several presidents were appointed and a default was
declared on January 1, 2002 on part of Argentina's sovereign debt, the
Legislative Assembly elected Peronist senator Eduardo Duhalde as President to
serve for the remaining term of former President De la Rua until December 2003.
Since his appointment on January 2, 2002 and through April 2003, President
Duhalde and the Argentine government undertook a number of

                                      -13-
<PAGE>


far-reaching initiatives. These are described in more detail in "Information on
the Company--Main Regulatory Changes in 2002 and 2003."

This package of measures has radically changed the monetary and foreign exchange
regime of the country and the regulatory environment for doing business in
Argentina, for all sectors of activity, including the financial sector. The
impact of these measures on the Argentine economy were significant in 2002 (the
GDP fell 10.9%) and are still uncertain in the long run.

Even though the administration succeeded in stabilizing the main macroeconomic
variables in the second half of 2002, it would still be premature to consider
that Argentina's economic crisis has ended. Moreover, the economic policy of the
government has consisted mainly of administering the crisis through monetary and
fiscal policies, and has not included structural reforms capable of supporting
long-term economic growth. Likewise, formal conversations have not been
initiated to restructure Argentina's sovereign debt affected by the default, and
as relates to the debt with multilateral credit agencies, only a short term
agreement with the International Monetary Fund (the "IMF") has been signed, that
allows Argentina to refinance the indebtedness maturing in 2003 up to August.
Therefore, a final resolution of the deep crisis that affects Argentina since
2001 depends on policies and measures that have not yet been implemented.

President Nestor Kirchner, from the Peronist Party, was sworn in as president on
May 25, 2003. His term ends in December 2007. Mr. Kirchner became President
after having obtained 22% of the votes in the first round of presidential
elections held on April 27, 2003. The second round ("ballotage"), contemplated
by Argentine Law for situations in which a majority is not obtained by any one
candidate in the first round, did not take place, because the other candidate
withdrew. The new administration will need to create the necessary support to
implement reforms required to ensure economic growth. If the new government is
not capable of implementing economic policies needed for Argentina to finally
leave the crisis behind and turn the economic growth it has experienced in the
last three quarters of 2002 and the first quarter of 2003 into a sustainable
development in the long run, there is considerable risk that political and
economic instability would increase again. This would likely have a negative
impact on the Argentine economy and on the financial system, including the Bank.

VOLATILITY OF THE REGULATORY ENVIRONMENT COULD CONTINUE TO BE HIGH AND FUTURE
ARGENTINE GOVERNMENTAL POLICIES COULD AFFECT THE ECONOMY AS A WHOLE AS WELL AS
FINANCIAL INSTITUTIONS AND THE BANK

The Argentine government has historically exercised significant influence over
the economy and financial institutions in particular have operated in a highly
regulated environment.

Since December 2001, the Argentine government has promulgated numerous,
far-reaching and not always consistent laws and regulations affecting the
economy in general as well as financial institutions in particular. We cannot
assure you that laws and regulations currently governing the economy or the
financial sector will not continue to change in the future, particularly in
light of the fact that the political and economic crisis of Argentina has not
yet been resolved. In addition, we cannot assure you that any changes will not
adversely affect the different economic agents in Argentina, including financial
institutions and the Bank, as well as its business, financial condition or
results of operations or its ability to honor its foreign-currency denominated
debt obligations.

THE FAILURE OF ARGENTINA TO REACH ADEQUATE AGREEMENTS WITH THE IMF OR TO
REFINANCE ITS FOREIGN DEBT COULD PREVENT ECONOMIC GROWTH AS A LONG-TERM TREND

On December 23, 2001, Argentina declared the suspension of payments on
Argentina's sovereign debt, except for debt owed to multilateral credit
agencies.

Argentina attempted to reach, throughout the whole of 2002, an agreement with
the IMF that would permit it to at least avoid a default with the multilateral
credit agencies. After negotiations for the whole of 2002, in January 2003,
Argentina reached an agreement with the IMF that contemplates the refinancing of
its debt with such credit agency maturing in 2003 through August, for US$6,600
million. In addition, the agreement facilitates the renewal of loans for
US$4,400 million from the World Bank and the Interamerican Development Bank
("IDB"). The agreement with the IMF is a short-term one and does not include new
funds.

                                      -14-
<PAGE>

The IMF has been reluctant to grant financial assistance for amounts that are
substantial, unless Argentina submits a program that the IMF considers
sustainable in the medium term and contains requirements established by the IMF.
The lack of adequate future agreements with the IMF, and particularly after the
short-term agreement signed in January 2003 expires, would strongly complicate
the difficult situation in which it is currently immersed. The lack of adequate
agreements with the IMF would prevent Argentina to access credit from other
multilateral credit agencies and would postpone the restructuring of its
defaulted foreign debt. Furthermore, Argentina's access to the voluntary
international credit market is dependent on the satisfactory resolution of this
restructuring.

If the inability of the Argentine government and the private sector to access
foreign financing continues, and/or Argentina does not succeed in satisfactorily
restructuring its foreign debt, the fiscal situation of the country would be
severely affected, undermining the ability of the government to implement
adequate economic policies (including structural reforms) and that of the
private sector to reinitiate an investment cycle. The consolidation of a growth
cycle in the medium term depends on all these factors. If a growth trend in
economic activity fails to materialize, a higher degree of political and
economic volatility is highly likely, as well as a new prolonged recession,
higher inflation and unemployment rates and a higher degree of social unrest.
This would negatively and materially impact the different economic agents
operating in Argentina, including the financial system and the Bank.

INFLATION MAY RISE FROM THE CURRENT LEVELS

The devaluation of the peso in January 7, 2002 and the subsequent increases in
the exchange rate, have generated pressures on the domestic price system
prompting inflation to reemerge in Argentina in 2002 after several years of
price stability and even periods of deflation. Argentina's historical experience
demonstrates that domestic prices of goods and services are highly linked to the
level of the exchange rate and its variations. Also, the expectation of
increases in the exchange rate have historically triggered increases in domestic
prices.

During the first half of 2002, there was considerable concern that the Argentine
Central Bank's printing of currency and the pressures on the price system
generated by the devaluation, would result in significant inflation or
hyperinflation. This did not happen, because the increase in the monetary base
was offset, by the Argentine Central Bank, mainly through the sale of
international reserves. In addition, the recession precluded the pass-through of
the full increase in the exchange rate to domestic prices and the government
prohibited increases in tariffs of public services and controlled price
increases of tradable goods through the increase of taxes on exports
("retenciones"). Finally, the increase in the nominal tax collection, due to
this increase and to the increase in prices, allowed the government use of
Argentine Central Bank financing to be limited during the period. During the
first half of 2002, inflation was very high but price increases decreased during
the year. In the first four months of 2003, consumer prices increased by 2.6%
and wholesale prices decreased by 1.7%.

If the value of the peso could not be stabilized in the future by positive
expectations about Argentina's economic future, or/and by adequate fiscal and
monetary policies, an increase in inflation rates can be expected. High
inflation or a high volatility of inflation rates would negatively and
materially affect the business volume of the financial system and preclude it
from resuming financial intermediation activities. This would in turn negatively
affect the level of economic activity and employment. High inflation would also
undermine Argentina's foreign competitiveness by diluting the effects of the
devaluation, with the same negative effects on the level of economic activity
and employment.

In the past, inflation materially undermined the Argentine economy and the
government's ability to create conditions that would permit growth. We cannot
assure you that the Argentine economy will not be negatively affected by a
resurgence of high rates of inflation.

AN EXCESSIVE APPRECIATION OF THE PESO COULD CREATE MORE RECESSION, RENEWED
PRESSURES IN THE FOREIGN EXCHANGE MARKET AND FINANCIAL LOSSES TO ECONOMIC
AGENTS, INCLUDING THE BANK, WITH NET ASSET FOREIGN CURRENCY POSITIONS

The devaluation of the peso on January 7, 2002 and the subsequent increases in
the exchange rate, mainly during the first half of the year, determined a 240%
increase in the nominal exchange rate of the peso vis-a-vis the US dollar during
2002. The inflation rate was substantially lower than the increase in the
nominal exchange rate. Consequently, the devaluation of the peso resulted in an
increase in the real exchange rate of approximately 139%, positioning the real
exchange rate at a historically high level.

                                      -15-
<PAGE>

In 2002, the combination of low imports and slightly lower exports resulted in a
trade balance surplus of US$16,375 million, US$10,026 million higher than in
2001.

If imports were to remain low and the restructuring of the Argentine sovereign
debt currently in default were not to occur or were substantially delayed, the
combination of a strong trade balance surplus and controls over the foreign
exchange market (still outstanding even if substantially relaxed) could result
in a significant appreciation of the real and nominal exchange rates.

In the medium term, a significant increase of the real exchange rate would
affect the Argentina's competitiveness, and this in turn could prompt new
recessionary pressures on economic activity and a new disequilibrium in the
foreign exchange market. Most importantly, in the short term, a significant
appreciation of the real exchange rate would reduce the Argentine public
sector's revenues by reducing tax collection in real terms, given the strong
reliance on taxes on exports. This would worsen the public sector's financial
condition, likely prompting an increase in taxes or in the printing of money.
The latter would likely lead to higher inflation, and both measures would prompt
recessionary pressures. See "--Inflation may rise substantially from the current
levels." Even if an increase of the exchange rate could have positive effects on
the financial situation of economic agents with dollar-denominated debt, an
excessive increase could have negative effects on the level of economic activity
and could result in a new period of economic, political and social instability.

In addition, the decrease in the nominal exchange rate negatively impacts the
financial condition of economic agents with long foreign currency positions,
including the Bank.

THE LACK OF ADDITIONAL COMPENSATION TO FINANCIAL INSTITUTIONS FOR CERTAIN
DAMAGES GENERATED BY THE GOVERNMENT'S ECONOMIC POLICY COULD BE DETRIMENTAL TO
THEIR FINANCIAL CONDITION

As of the date of this annual report, the government and the Argentine Central
Bank have provided a series of rules to determine the amount of compensation, in
connection with the "asymmetric pesification", to which each financial
institution is entitled in the form of government bonds (mostly
dollar-denominated bonds maturing in 2012, or "Boden 2012"). However, certain
situations have not been contemplated by such rules, such as providing
compensation for the effects of the "asymmetric pesification" on the balance
sheet of non-banking subsidiaries with complementary activities.

In addition, while Congress is considering a proposal that contemplates
providing compensation in the form of peso-denominated government bonds maturing
in 2013 ("Boden 2013") for certain items which are pending at the date hereof.
The items financial institutions would be compensated for are (i) the
enforcement by the government of different inflation adjustment coefficients for
pesified bank assets and liabilities, and (ii) the fact that banks have had to
repay dollar-denominated deposits, pursuant to depositors' judicial actions, at
exchange rates greater than Ps.1.4 per US dollar (the exchange rate at which the
dollar deposits were initially pesified by the government). See "Item 4.
Information on the Company--Main Regulatory Changes in 2002 and
2003--Compensation to Financial Institutions."

We cannot assure you that the government will provide compensation to financial
institutions, such as the Bank, to compensate the potential losses arising from
the matters described in the previous paragraph, or that such compensation will
be sufficient to cover all of the potential losses or enhance the Bank's ability
to meet its debt obligations as they mature.

DETERIORATION OF FINANCIAL INSTITUTIONS' ASSET QUALITY DUE TO THE ECONOMIC
CRISIS MAY AFFECT THEIR FINANCIAL CONDITION AND THEIR INCOME GENERATION CAPACITY

Argentine debtors' capacity to repay their loans, already impaired by the deep
and persistent recession that began in the second half of 1998, has deteriorated
significantly since December 2001. As a consequence the quality of the assets of
financial institutions operating in Argentina or of any financial institution,
domestic or foreign, with a significant exposure to Argentine residents has
deteriorated since that date. The Bank has established allowances for loan
losses for significant amounts in 2002, to cover the risks inherent to its
portfolio of loans to the private sector.

                                      -16-
<PAGE>

We cannot assure you that the deterioration of the quality of the private sector
loan portfolio will not intensify further and that this will not affect the
Bank's income generation capacity.

In addition, currently the financial system's assets, as well as those of the
Bank, include a substantial exposure to debt instruments of the Argentine public
sector, mainly as a consequence of the pesification of most of these assets at
the Ps. 1.40 per US dollar exchange rate (while most private sector assets in
bank books were pesified at the 1 to 1 parity between the peso and the US
dollar) and of the provision of compensation for the "asymmetric pesification"
in the form of government securities (compensatory and hedge bonds), mostly
dollar-denominated or the Boden 2012.

The Argentine public sector, including the national and the provincial
governments, is currently in default on part of its foreign debt, including the
Argentine Republic External Notes held by the Bank. In addition, the Argentine
public-sector solvency in the long run is today uncertain, given that its
defaulted foreign debt has not been renegotiated yet and that an economic policy
with long term objectives has not been defined yet. The Boden 2012 and
promissory notes issued by the national government and secured by tax
collections, with no quotation in the secondary markets, known as "prestamos
garantizados" (the "secured loans"), in banks' portfolios that orginally
constituted an exposure to the national government are currently normal, but the
secured loans that originally constituted an exposure to the provincial
governments are currently undergoing a restructuring and an exchange for secured
loans where the debtor will be the Fondo Fiduciario para el Desarrollo
Provincial (the "Fiduciary Fund for Provincial Development" or "FFPD"), a
national government entity. The quality of Bank's public-sector assets is
therefore currently subject to a certain degree of impairment. These assets were
booked as of December 31, 2002 at their face value. See "Item 5. Operating and
Financial Review and Prospects--Description of Consolidated Assets."

The value of a large portion of banks' assets, as well as bank's income
generation capacity, are currently to a large extent dependent on the Argentine
public sector's repayment capacity.

RECENT ARGENTINE ECONOMIC POLICIES HAVE RESTRICTED FINANCIAL ACTIVITIES FOR AN
UNDETERMINED PERIOD OF TIME

The various measures implemented by the Argentine government since late 2001 and
the first half of 2002, have significantly deteriorated the confidence of
depositors and investors in the Argentine financial system and in all financial
institutions. In a scenario where depositors' confidence as well as public
sentiment towards banks has been seriously affected, for an uncertain period of
time, the financial system's ability to act as an intermediary between savings
and credit has been severely hampered. For an uncertain period of time, and to a
larger extent than in the past, banking activity will most likely be limited to
providing certain traditional commercial banking services which include: the
management of means of payment (with emphasis on electronic means), the
provision of bank accounts for transactional purposes, credit card activities,
transactional deposit taking, foreign-trade services, the granting of short term
loans limited to certain instruments and the prefinancing of exports.

Under these circumstances, for an undetermined period of time, the scale of
operations of Argentine-based financial institutions, including the Bank, their
business volume, the size of their assets and liabilities and most likely their
income generation capacity could be much lower than in the past. We cannot
assure you that these circumstances will change in the future.

Even though deposits in the financial system and with the Bank resumed growth in
mid 2002, this trend would have to persist over time to allow financial
institutions to return to financial intermediation activity. This would require
the public to regain confidence in the Argentine financial system. At the same
time, it would require the removal of uncertainty about the future related to
the existence of a number of unresolved structural reforms and issues, such as
the negotiation of a new agreement with the IMF, the renegotiation of the
defaulted sovereign debt, the redesign of the tax system and the pending
compensation to financial institutions, among others.

AN INCREASING NUMBER OF JUDGMENTS AGAINST FINANCIAL INSTITUTIONS, IN CONNECTION
WITH THE "CORRALON", AND THE RECENT DECISION OF THE GOVERNMENT TO LIFT THE
"CORRALON" MAY RESULT IN FURTHER DETERIORATION OF THE DEPOSIT BASE

As a consequence of the measures adopted by the government in connection with
the pesification of deposits originally denominated in dollars and the
restructuring of bank deposits since the beginning of 2002, a significant

                                      -17-
<PAGE>

number of legal actions were initiated by individuals and legal entities against
financial institutions, including the Bank, on the basis that these measures
violated constitutional and other rights. These actions have resulted in a
significant withdrawal of deposits from the financial system and the Bank.
Although the Argentine government imposed certain limitations on the withdrawal
of deposits pursuant to these injunctions, we cannot assure you that an
increasing number of judgments against financial institutions and the Bank will
not be obtained, leading to additional erosion of its deposit base.

On March 5, 2003, the Argentine Supreme Court (the "Supreme Court") ruled on the
lawsuit by the Province of San Luis against the Argentine National Government,
regarding the reimbursement, in dollars or in pesos for an amount equivalent to
the dollar amount at the free exchange rate, of a pesified dollar-denominated
deposit that the Province of San Luis holds at Banco Nacion. In its ruling, the
Supreme Court declared the pesification of dollar-denominated deposits
unconstitutional and ordered Banco Nacion to reimburse the Province of San Luis'
deposit in dollars or in pesos for an amount equivalent to the original dollar
amount at the free exchange rate. In its ruling, the Supreme Court established a
60-day term for the parties to convene the manner and the terms of the
reimbursement. The parties did not reached an agreement within the established
period. Therefore, the issue still has to be resolved by the Supreme Court.

The Supreme Court's ruling did not apply to individual depositors, and therefore
did not have an immediate effect on the financial system as a whole. The Supreme
Court has not ruled on lawsuits concerning individual depositors. If the Supreme
Court rules favorably to the redollarization of restructured deposits currently
outstanding in the financial system, the government could take measures to
compensate financial institutions for the redollarization of their restructured
deposits or, alternatively, could establish a compulsory exchange of these
deposits for dollar denominated government bonds.

In addition, the Government established the freeing of the restructured deposits
("corralon") not exchanged for government bonds in the exchange offers
implemented through Decree No.739/03 of April 1, 2003. Large restructured
deposits were exchanged for a time deposit maturing in 90 or 120 days, depending
on the deposit amount and for dollar-denominated national Government bonds
maturing in 2013 (Boden 2013). Approximately 46.6% of eligible deposits in the
financial system participated in this transaction.

While this measure reduces the probability of new demands being filed by
depositors, it does not eliminate the negative effects on financial
institutions' financial condition of the deposit payments pursuant to judicial
actions already made by them and not compensated by the government. These
measures also raise uncertainty about the future decision of large depositors
about whether to keep their 90- and 120-day free time-deposits whithin the
financial system when they mature, a decision that could affect the system's
deposit base in the near future.

NEW LIMITATIONS TO CREDITORS' RIGHTS IN ARGENTINA AND TO THE ABILITY TO
FORECLOSE ON CERTAIN GUARANTEES AND COLLATERAL MAY ADVERSELY IMPACT FINANCIAL
INSTITUTIONS

In 2002, the Argentine government passed various laws and regulations limiting
the ability of creditors to foreclose on collateral and to exercise their rights
pursuant to guarantees and similar instruments upon the occurrence of a default
by a debtor under a financing agreement. Such limitations have restricted
Argentine creditors, such as the Bank, from initiating collection actions and/or
lawsuits to recover on defaulted loans. Even if these rules ceased to be
applicable, there can be no assurance that the Argentine government will not
pass new rules and regulations restraining the ability of creditors to enforce
their respective rights pursuant to debt agreements, guarantees and similar
instruments.

On May 8, 2003, Congress passed a new law that suspends for 90 days from the
date of publication of the Law in the Official Gazette, foreclosures and
auctions of real estate property representing a debtor's sole family residence.
The Executive Branch sanctioned this law on June 3, 2003.

                                      -18-

<PAGE>

THE FOREIGN EXCHANGE MARKET IS SUBJECT TO CONTROLS THAT COULD PREVENT FINANCIAL
INSTITUTIONS FROM HONORING THEIR DEBT WITH FOREING CREDITORS

From 1989 to November 30, 2001, there were no foreign exchange controls
preventing or restricting the conversion of pesos into U.S. dollars. Since
December 3, 2001, the majority of transfers of funds abroad to effect payment of
financial indebtedness required the prior authorization of the Argentine Central
Bank.

Controls over the foreign exchange market established in December 3, 2001 were
maintained with certain variations throughout all of 2002. Such controls, which
were tightened at the beginning of the second semester of 2002, together with a
significant surplus in the country's trade balance ensured a fluid supply of
foreign currency to the market and affected the appreciation of the peso.

In order to prevent the appreciation of the peso, the Argentine Central Bank
progressively eased certain of the restrictions imposed over the foreign
exchange market beginning in November 2002. However, at the date hereof,
transfers abroad of foreign exchange to effect payments on debt of a financial
nature by financial institutions that have received financial assistance from
the Argentine Central Bank, such as the Bank, continues to be subject to the
approval of the Argentine Central Bank. See "Item 4. Information on the
Company--Main Regulatory Changes in 2002 and 2003--Foreign Exchange and Monetary
System."

Despite the easing of the restrictions imposed on the foreign exchange market,
we cannot assure you that the Argentine Central Bank will further liberalize the
foreign exchange market or that it will not implement more restrictive rules in
the future. If the Argentine Central Bank maintains the current restrictions or
if it reinstates more restrictive rules, financial institutions, including the
Bank, may face difficulties in making transfers of US dollars abroad for payment
of their financial obligations.

                        RISK FACTORS RELATING TO THE BANK

Banco Galicia's assets and operations comprise and will continue to comprise the
substantial majority of Grupo Galicia's assets and operations for the
foreseeable future. Therefore, most risk factors relating to an investment in
Banco Galicia also apply equally to an investment in Grupo Galicia.

THE BANK'S INABILITY TO PAY ITS DEBT SERVICE OBLIGATIONS UNDER THEIR CURRENT
TERMS COULD SEVERELY IMPACT OUR ABILITY TO CONTINUE AS A GOING CONCERN

Our audited consolidated financial statements have been prepared under the
assumption that we will continue as a going concern. However, our independent
auditors have stated in their most recent report that, due to among other
things, the issues surrounding the Bank's inability to comply with the Plan,
which include restructuring its foreign debt and most of its debt with the
Argentine Central Bank, there is uncertainty about our ability to continue as a
going concern. Our audited consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty. If Banco
Galicia is not successful in consummating a debt restructuring or if the Group
is not successful in generating sufficient cash from operating activities to
meet our financial obligations we may be forced to obtain outside sources of
funding or receiving government assistance to comply with our obligations.
Furthermore, the Bank's inability to successfully restructure its debt would
materially and adversely affect our financial condition and continuing
operations. If, as a result, we are required by the Argentine Central Bank to
liquidate our operations, the holders of our debt and our shareholders will
likely incur a significant loss.

THE BANK HAS NOT FINALIZED THE RESTRUCTURING OF ITS DEBT WITH FOREIGN CREDITORS

In late 2001, due to the Argentine crisis and its material adverse effects on
the Bank's cash flows and deposit base, the Bank became increasingly unable to
access the financial markets or otherwise obtain any financing, other than from
the Argentine Central Bank. The Bank's liquid assets, deposits and cash flows
from operations became insufficient to pay its foreign obligations as they
became due after December 31, 2001. As a result, the Bank began to negotiate
with its foreign creditors, as obligations matured, for an extension to the
maturities of these obligations until a comprehensive renegotiation of its
entire liabilities with foreign creditors could be accomplished.

                                      -19-

<PAGE>

On June 12, 2002, the Bank announced the restructuring of all of its debt with
foreign creditors, under the framework of the Galicia Capitalization and
Liquidity Plan (the "Plan"). Within this framework, the repayment of the Bank's
debt with foreign creditors has been postponed until such debt is renegotiated.
At the same time, the Bank announced that it had hired an international
investment bank as advisor in the process.

During 2002, the Bank succeeded in renegotiating the liabilities of its New York
Branch of approximately US$330 million and initiated formal conversations with a
steering committee that was established by the Bank's largest creditors in
August 2002 to restructure the foreign debt of the Bank's head office in
Argentina and that of its Cayman Branch. Such debt amounts to approximately
US$1,360 million, excluding US$399.5 million of Banco Galicia's debt with
Galicia Uruguay. The terms and conditions under which the debt of the Bank's
head office in Argentina and that of its Cayman Branch will be restructured have
not been agreed upon yet but negotiations have progressed and are ongoing.

Because the Bank has failed to make certain scheduled debt payments on its
foreign debt and the creditors have not waived any defaults or agreed to
forebear the exercise of their rights, its creditors are entitled to accelerate
the maturity of its obligations and to seek to exercise remedies, including,
without limitation, seeking to obtain and enforce judgment liens against the
Bank. In addition, due to cross-default provisions, the Bank's failure to make
certain scheduled payments of interest or principal constitute an event of
default under many of its other financing agreements (including loan agreements,
the indenture for its medium term note program, time deposits, swaps and
repurchase agreements).

If as a result of the above mentioned negotiations with its creditors, the Bank
were unable to reach a satisfactory rescheduling agreement with its creditors
and they attempted to exercise remedies in connection with its financial debt,
the Bank's financial condition and its operations would be materially and
negatively affected. The restructuring of the Bank's foreign debt is an
essential component of its operating ability.

We cannot assure you that a satisfactory restructuring of the Bank's foreign
debt will be achieved or that a satisfactory restructuring alone will, in turn,
ensure the Bank's ability to successfully implement its new business strategy
and regain financial stability.

IF THE BANK FAILS TO OBTAIN APPROVAL FROM THE ARGENTINE CENTRAL BANK OF ITS
FOREIGN-DEBT RESTRUCTURING PLAN, IT WOULD NOT BENEFIT FROM THE SPECIAL REPAYMENT
PLAN OF THE FINANCIAL ASSISTANCE IT RECEIVED FROM THE ARGENTINE CENTRAL BANK

On March 28, 2003, the Argentine government issued Decree 739/03, which among
other things, established the methodology to pay the advance received from the
Central Bank during the Argentine crisis. On April 30, 2003, the Argentine
Central Bank issued Communique "A" 3940 declaring that banks refinance their
outstanding financial assistance from the Central Bank and their outstanding
foreign debt. Based on this ruling, the Bank must submit a refinancing program
for its foreign debt to the Central Bank for its approval prior to December 5,
2003. As of the date of this annual report, the Bank has not complied with this
requirement as its discussions with its creditors are not completed. In
addition, the Argentine Central Bank established a procedure for repaying the
financial assistance granted by the Argentine Central Bank in 70 or 120 monthly
installments that may be opted for by banks that receive approval of their
refinancing program on or prior to the prescribed date. The balance of the
Bank's financial assistance from the Argentine Central Bank as of December 31,
2002 was Ps.5,581.5 million. If the Bank does not submit a refinancing program,
or if, a refinancing program is submitted but not approved by the Argentine
Central Bank, by the prescribed date, the Bank will not receive the benefit of
the special repayment terms for its Argentine Central Bank financial assistance.
If the Bank does not receive this benefit, its financial condition and its
operations would be materially and negatively affected. See "Item 4. Information
on the Company--Argentine Bank Regulations--Financial Assistance from Argentine
Central Bank."

THE BANK'S ASSETS ARE CONCENTRATED IN ARGENTINE PUBLIC-SECTOR DEBT INSTRUMENTS

As of December 31, 2002, the Group's exposure to the Argentine public sector,
mostly consisting of the Bank's exposure, including the compensatory and hedge
bonds (received or to be received by the Bank in accordance with applicable
regulations) and exposure both to the national and provincial governments,
amounted to Ps.18,121.5

                                      -20-

<PAGE>

million, representing approximately 76.5% of the Group's consolidated assets.
See "Item 5. Operating and Financial Review and Prospects--Total Exposure to the
Argentine Public Sector."

This level of exposure to the Argentine public sector was mostly the result of
the pesification of public sector assets at the Ps.1.4 per US dollar exchange
rate, while most private sector assets were pesified at the 1 to 1 parity, and
of the compensation of the effects of the "asymmetric pesification" through
government bonds. These bonds were, in the Bank's case, dollar-denominated and
the value of the dollar increased significantly during 2002. Likewise, the high
exposure of the Bank to public sector assets was also the consequence of the
decrease experienced by the portfolio of loans to the private sector as a result
of the repayment or prepayment by debtors of these loans, in a context where
origination was practicaly inexistent.

Consequently, the value of the Bank's assets and its income and cash flow
generation capacity are to a large extent dependent on the Argentine public
sectors' repayment capacity.

THE BANK HAS RECORDED ITS BODEN AND ITS RIGHTS TO RECEIVE OR ACQUIRE FUTURE
BODEN AS ASSETS HAVING A VALUE EQUAL TO THE FACE AMOUNT OF THE BODEN RECEIVED OR
TO BE RECEIVED AND ACQUIRED

As a result of the asymmetric pesification of Banco Galicia's assets,
substantially Banco Galicia's portfolio of loans to the private sector and
certain other assets originally denominated in US dollars were converted into
pesos at a one-to-one exchange rate. At the same time, the Bank's portfolio of
loans to the public sector and other assets were pesified at the Ps.1.4 per US
dollar exchange rate and an inflation adjustment coefficient based on changes in
the consurmer price index, or the CER, and a maximum interest rate as determined
by the government was applied to these assets. In addition the Bank's
liabilities, substantially deposits and local obligations in U.S. dollars or
other foreign currencies in financial institutions were converted into pesos at
the exchange rate of Ps.1.40 per US$1 or its equivalent in such other currency,
and the Bank's liabilities with foreign creditors remained denominated in
foreign currencies. The effect of this pesification, resulted in a significant
decrease of our shareholders'equity.

On June 1, 2002, the Argentine government announced that it would issue
government bonds to compensate financial institutions for the adverse effects of
the asymmetric pesificaton. The issuance of dollar-denominated government
securities maturing in 2012 and a Libor coupon (known as "Boden") was
contemplated to cover two different impacts of the "asymmetric pesification":
(i) the negative effect of the pesification of assets and liabilities at
different exchange rates and (ii) the currency mismatch that would otherwise
result from the "asymmetric pesification" resulting from the fact that certain
liabilities remained dollar denominated. The amount of the compensation for the
first effect is known as the "compensatory bond" and the amount of the
compensation for the second effect is known as the "hedge bond." The government
also decided that the hedge bond would have to be purchased by financial
institutions by means of an asset swap or a loan from the Argentine Central Bank
in pesos, a 2% annual interest rate and principal adjustment by the CER.

The Bank determined the amount of compensation for the effects of the
"asymmetric pesification" to which the Bank is entitled in accordance with
applicable rules and in the fourth quarter of 2002 we informed the Argentine
Central Bank the amount of such compensation. In accordance with such
presentation, the Bank is entitled to receive US$2,254 million of face value of
dollar-denominated Boden, of which US$1,021.8 million correspond to the
compensatory bond and US$1,232.2 million to the hedge bond. Accordingly, the
Bank notified the Argentine Central Bank of its election to purchase the hedge
bond through Argentine Central Bank borrowing. In accordance with Argentine
Banking GAAP, the Bank's balance sheet as of December 31, 2002 includes
Ps.7,724.7 million of compensation for the "asymmetric pesification", Ps.687.5
million of Boden that the Bank has actually received and Ps.7,037.2 million
representing the Bank's right to receive additional Boden up to the amount of
the compensatory bond and acquire additional Boden in the amount determined for
the hedge bond. The Bank's balance sheet as of December 31, 2002 also include
Ps.2,468.4 million representing Argentine Central Bank borrowings expected to be
incurred to finance the Bank's right to acquire the hedge bond. Additionally,
the Bank's income statement for fiscal year 2002 includes the accrual of quoted
interest on Boden and a 2% annual interest rate and adjustments by the CER on
such Argentine Central Bank borrowings.

Although the Bank has recorded its right to receive and acquire future Boden as
an asset having a value equal to the full face value of the Boden, the estimated
market value of this right is significantly lower, because the Boden currently
have a market price that results in value substantially below their face value.
Moreover, we cannot assure

                                      -21-

<PAGE>

you that the Bank will in fact receive all of the Boden currently recorded as
assets on our consolidated balance sheet. The actual amount of Boden the Bank
may ultimately receive and the actual amount of debt the Bank may ultimately
incur from the Argentine government remain subject to approval from the
Argentine Central Bank at the date of this annual report. As a result, the
compensation the Bank ultimately receives and the related liabilities the Bank
incurs may differ in amounts that could be material and could adversely affect
our finance position.

In addition, Boden are unsecured debt obligations of the Argentine government
which is currently in payment default on substantially all of its indebtedness.
As of December 31, 2002, the Boden were not rated and were trading in the
secondary market at a price of approximately 44%. The Bank's practice of
carrying Boden at face value does not reflect the estimated market value of such
assets which is substantially less than such carrying value. In this important
respect and others, our audited consolidated financial statements are not
comparable to our historic financial statements and have been prepared according
to accounting policies that differ significantly from generally accepted
accounting policies in both the United States and Argentina. For a description
of the significant differences between Argentine Banking GAAP and US GAAP, see
notes 38 and 39 to the annual consolidated financial statements in this annual
report.

THE RETURN OF BANCO GALICIA URUGUAY'S DEPOSITS OVER TIME, AS PER THE
RESTRUCTURING AGREED WITH ITS DEPOSIT HOLDERS IN 2002, DEPENDS ON CERTAIN
FACTORS WHICH ARE NOT ENTIRELY OVER THE GROUP'S CONTROL

Banco Galicia Uruguay restructured its deposits during 2002. The deposits of its
subsidiary, Banco de Galicia (Cayman) Ltd., are currently under restructuring.
The amount corresponding to Galicia Uruguay's restructured third-party deposits
outstanding as of December 31, 2002 (excluding restructured deposits of related
companies) is shown in the Group's financial statements as dollar-denominated
time deposits for US$424.2 million, dollar-denominated negotiable obligations
for US$462.6 million and Ps.34 million demand deposits corresponding to the 3%
initial payment made beginning January 2003. Galicia Uruguay expects to face
these obligations with funds provided by (i) the recovery of its loan portfolio,
(ii) the reimbursement by Banco de Galicia y Buenos Aires S.A. of the deposits
held by Galicia Uruguay at its Cayman Branch, subject to the approval of the
Argentine Central Bank; and (iii) the Boden 2012 that correspond to Galicia
Uruguay for compensation of the effects of the "asymmetric pesification" of
Galicia Uruguay's assets.

However, the restructuring of Galicia Uruguay deposits at Banco Galicia is
currently in progress and depends on the the approval of the Argentine Central
Bank and on the resolution of the restructuring of Banco Galicia's foreign debt,
the negotiations of which are still ongoing with Banco Galicia's creditors.
Completion of this process and the terms and conditions of this restructuring
are not under the Group's control.

In addition, the Bank has requested to the Argentine Central Bank authorization
to transfer to Galicia Uruguay dollar-denominated Boden 2012 for an amount
equivalent to the net effect of the compensation determined for Galicia Uruguay.
We cannot assure you that the Argentine Central Bank will authorize the
transfer.

The failure by Galicia Uruguay to honor its restructured deposits' repayment
schedule would likely have a material negative impact on Banco Galicia's
operations in Argentina, with a loss of reputation, customers and deposits,
given that the two banks share their customer base to a large extent. As a
result, the Banco Galicia could be forced to require receiving additional
financial assistance from the Argentine Central Bank and our financial condition
and results of operations would likely be materially and adversely affected. See
"Item 4. Information on the Company--Initiatives and Investments--Banco
Galicia--Galicia Capitalization and Liquidity Plan", and "Item 5. Operating and
Financial Review and Prospects--Description of Consolidated Liabilities" and
"--Contractual Obligations and Contingent Liabilities."

THE BANK'S FUTURE BUSINESS ACTIVITIES MAY BE SUBSTANTIALLY DIFFERENT THAN THOSE
UNDERTAKEN BY THE BANK HISTORICALLY

As a result of the political and economic crisis that Argentina experienced in
late 2001 and in 2002 and the material and adverse effect that such crisis has
had on the Bank and other financial institutions operating in Argentina, we
cannot assure you that the Bank will be able to undertake the same type of
business activities in the future or maintain the same level of market activity
that it has developed in periods prior to December 2001. Therefore, the

                                      -22-

<PAGE>

Bank's future business activities, as well as the levels of such business
activities and the Bank's market share for these activities, may differ
substantially from its business and levels at December 31, 2001 or in prior
periods.

IT MAY BE DIFFICULT FOR THE BANK TO SUCCESSFULLY IMPLEMENT ITS NEW BUSINESS
STRATEGY

The current economic situation in Argentina makes it difficult to predict
whether we will be able to implement our new business strategy, including
increasing our fee income so as to generate sufficient revenue to cover
expenses. See "Item 4. Information on the Company--Initiatives and
Investments--Banco Galicia's Strategy." Demand for fee-related products and
services is increasing in Argentina, together with the improved situation of the
economy, but the economy as a whole and the relevant markets have not stabilized
enough to be certain that demand will continue to increase. Therefore, there can
be no assurance that our new business strategy will in fact be successful or
whether continuing or new events in Argentina (including events related to the
recent presidential elections of April 2003, the restructuring of the Argentine
government debt and negotiations between the Argentine government and its
creditors), will not adversely affect the Argentine economy as to call into
question our ability to successfully implement our new business strategy and
regain financial stability.

The Bank's ability to pay its debt obligations, as well as its overall
profitability are subject to a number of variables, including the recovery of
the financial intermediation business in Argentina, the restructuring of
Argentina's own indebtedness, compliance on the part of the government of the
contractual terms and conditions of the public-sector assets held by the Bank,
the reaction of its customer base to these developments, the policies to be
articulated in connection with the recent change in government, the continuation
of financial support from the IMF and the resolution of discussions with other
multilateral credit agencies or other creditors of Argentine debt.

THE CURRENT ECONOMIC POLICY HAS INTRODUCED SIGNIFICANT CASH FLOW AND INTEREST
RATE GAPS INTO OUR BALANCE SHEET, THAT SIGNIFICANTLY AFFECT OUR INCOME
GENERATION CAPACITY

As explained in other sections of this annual report, the economic policy
implemented in 2002 has meant the compulsory modification by the government of
most of the contracts outstanding between economic agents, which, among others,
has completely modified the currency of denomination of bank assets and
liabilities as of December 31, 2001, as well as their interest rates and
maturity, and has introduced the capital adjustment by the CER or the CVS
indexes of the pesified assets or liabilities. As a result, the balance sheets
of financial institutions, including the Bank, currently contain interest rate
and cash flow mismatches in the different segments of assets and liabilities.
These mismatches are currently, to a large extent, beyond a financial
institution's control.

During 2002 the evolution of the variables that determine the yields of the
matched and mismatched portions of these segments has generated losses to
financial institutions and to the Bank. We cannot assure you that the financial
variables will stabilize in such a way that such losses or these mismatches will
disappear.

For the financial system as a whole, as of the end of 2002, assets in pesos that
accrue interest only are estimated to be lower than liabilities with the same
characteristics. This implies that part of the assets pertaining to the peso
segments adjusted by an index and with fixed and low interest rates are being
funded by free deposits that bear market rates and reprice in the short term or
by dollar-denominated liabilities. In the peso segment adjusted by the CVS there
are no liabilities with the same characteristics.

The financial system as a whole, and the Bank, have a significant exposure to
public sector debt instruments. A significant portion of these assets, secured
loans, amortizes over a period of between 7 and 16 years, bearing CER plus a
fixed rate of between 2 and 5%. On the liability side, banks have restructured
deposits that bear the CER adjustment and a fixed rate. These deposits, for
which the original restructuring schedule established by the government
amortizes in approximately 3 years, have recently decreased due to the freeing
of the "corralon". In the Bank's case, assets earning CER plus an interest rate
exceed liabilities with the same characteristics, and the mismatch is expected
to grow over time. In an effort to reduce the mismatch in banks' balance sheets,
the government established that the Argentine Central Bank's financial
assistance for liquidity reasons would be repayed out of the cash flows derived
from certain public sector assets, but in a maximum of 70 or 120 monthly
installments (a period that is shorter than the life of public sector assets
included), with principal adjustment by CER and an annual interest rate of 3.5%
(which exceeds the average rate earned on the Bank's public sector assets
included). This measure reduces but does not eliminate the cash flow and
interest rate mismatches between public

                                      -23-

<PAGE>

sector assets and liabilities existing as of December 31, 2002 in financial
institutions and the Bank's balance sheets, or the negative effect on liquidity
of such mismatch. Also, this measure reduces the current mismatch in the CER
assets and liabilities but paves the way for future (asset) mismatches. We
cannot assure you that the effect of these mismatches on bank's future liquidity
and results of operations will not be material.

In addition, the "asymmetric pesification" generated significant losses to
financial institutions as well as, depending on the financial institution, short
foreign currency positions (which previously did not exist). These were
compensated by the government through the compensatory and the hedge bonds, that
is Argentine government bonds maturing in 2012 that amortize over a 10-year
period and bear LIBOR, while the Bank's dollar-denominated debt has a
significantly shorter maturity and higher interest rates. To reduce these gaps,
the Bank is currently in the process of restructuring the foreign debt of the
head office in Argentina and that of its Cayman Branch. We cannot assure you
that a satisfactory restructuring of our foreign debt will be achieved by us or
that this alone will, in turn, eliminate the liquidity and interest rate
mismatches in the foreign currency segment in such a way as to allow us to
regain financial stability.

IN THE EVENT OF LIQUIDATION OF A FINANCIAL INSTITUTION, THE ARGENTINE CENTRAL
BANK, DEPOSITORS AND OTHER CLAIMANTS WOULD HAVE A RIGHT OF PRIORITY OVER ALL
OTHER CREDITORS

In the event of a liquidation of a financial institution, applicable rules in
Argentina provide that the Argentine Central Bank, depositors, labor creditors
and others, would have an absolute priority right over all other creditors
(including the holders of equity securities and notes or other types of
indebetedness). As a result, in the event of a liquidation, the Bank's
obligations with other creditors would be subordinated to the discharge of
claims of preferred creditors.

ITEM 4. INFORMATION ON THE COMPANY

ORGANIZATION

Grupo Galicia was incorporated on September 14, 1999, as a stock corporation,
sociedad anonima, under the laws of Argentina. Our domicile is in Buenos Aires,
Argentina. Under our by-laws, our duration is until June 30, 2100. The duration
of Grupo Galicia can be extended by resolution taken at a general extraordinary
shareholders' meeting. Our principal executive offices are located at Teniente
General Juan D. Peron 456, Second Floor, (1038) Buenos Aires, Argentina. Our
telephone number is (54-11) 4343-7528.

Our agent for service of process in the United States is CT Corporation System,
presently located at 111 Eighth Avenue, 13th Floor, New York, New York 10011.

ORGANIZATIONAL STRUCTURE

The following chart illustrates our organizational structure as of December 31,
2002. Percentages indicate the ownership interests held. All of the companies
shown in the chart are incorporated in Argentina, except for:

-    Banco Galicia Uruguay S.A., incorporated in Uruguay;

-    Galicia Pension Fund Ltd. and Banco de Galicia (Cayman) Ltd., incorporated
     in the Cayman Islands;

-    Net Investment BV (Netherlands), incorporated in Netherlands; and

-    Tradecom Holanda, incorporated in Netherlands.

Since February 13, 2002, Banco Galicia Uruguay's activities have been suspended.
See "--Banco Galicia."

                                      -24-

<PAGE>

                            ORGANIZATIONAL STRUCTURE

[FLOW CHART]

1)   Aguas Provinciales de Santa Fe S.A. 12.5%; Inversora Diamante S.A. 12.5%;
     Electrigal S.A. 12.5%; Inversora Nihuiles S.A. 12.4991%; Correo Argentino
     S.A. 11.77%; Aguas Cordobesas S.A. 10.833%; Aguas Argentinas S.A. 8.26%;
     A.E.C. S.A. 6.965%, Caminos de las Sierras S. A. 2.4835%.

2)   Multibrand S.A. 12.5%; Seguros de Depositos S.A. ("Sedesa") 12.0710%;
     Coelsa 12.99%; Alfer S.A. 9.8024%; Interbanking S.A. 7.69%; Argencontrol
     S.A. 5.766%; Finanban S.A. 6.67%; Ocye S.A. 6.0%; Visa 5.0%; Mercado
     Abierto Electronico S.A. 1.4851%; AIG-GE Capital Latin American
     Infrastructure Fund LP 1.45477%; Banco Latinoamericano de Exportaciones
     S.A. 0.10%; S.W.I.F.T. S.C. 0.02%, Corporacion Financiera S. A. 9.09%.

3)   Tradecom International (Netherlands) is a shareholder of BtoB Comercial
     S.A.

When we refer to our business or when we use the terms "Grupo Galicia" or the
"Group", we mean the businesses of Grupo Galicia, the holding company, Galicia
Warrants S.A., Sudamericana Holding S.A. and its subsidiaries, Net Investments
S.A. and its subsidiaries, and Banco Galicia consolidated with Galicia Uruguay
and its subsidiaries, Tarjetas Regionales S.A. and its subsidiaries, and the
following consolidated subsidiaries: Galicia Valores S.A., Sociedad de Bolsa,
Galicia Capital Markets S.A. and its subsidiaries, Galicia Factoring y Leasing
S.A. and AgroGalicia S.A. (collectively the "Bank" or "Banco Galicia").

                                      -25-

<PAGE>

HISTORY

We were formed on September 14, 1999, as a financial services holding company,
to hold all of the shares of capital stock of Banco Galicia held by members of
the Escasany, Ayerza and Braun families. We were formed with an initial nominal
capital of 24,000 common shares, 12,516 of which were designated class A shares
and 11,484 of which were designated as class B shares. Following the formation
of Grupo Galicia, the holding companies which held the shares in Banco Galicia
on behalf of the Escasany, Ayerza and Braun families were merged into Grupo
Galicia. Following the merger, Grupo Galicia held 46.34% of the outstanding
shares of Banco Galicia. Simultaneously with the merger, Grupo Galicia increased
its capital from 24,000 to 543,000,000 common shares, 281,221,650 of which were
designated as Class A shares and 261,778,350 of which were designated as Class B
shares. Following such capital increase, all of the Class A shares of Grupo
Galicia were held by EBA Holding S.A., an Argentine corporation that is 100%
owned by our controlling shareholders, and the Class B shares were held directly
by our controlling shareholders, in an amount equal to their ownership interests
in the holding companies that were merged into Grupo Galicia.

On May 16, 2000, we held an extraordinary shareholders meeting during which the
shareholders unanimously approved a capital increase of up to Ps.628,704,540 and
approved the public offering and listings of our Class B shares. All of the new
common shares were designated as Class B shares, with a par value of Ps.1.00.
During this extraordinary shareholders meeting, all of the existing shareholders
of Grupo Galicia waived their preemptive rights in order to establish the basis
for the exchange offer of Grupo Galicia shares for Banco Galicia shares. At the
same shareholders' meeting, the shareholders determined that the exchange ratio
for the exchange offer be 1 Class B share of Banco Galicia for 2.5 Class B
shares of Grupo Galicia and 1 ADS of Banco Galicia for 1 ADS of Grupo Galicia.
We completed the exchange offer in July 2000. At the completion of the exchange
offer, our only significant asset was our 93.23% interest in Banco Galicia. By
the end of 2002, our interest was 93.59% as a result of open market purchases.

We are a holding company whose corporate purpose is exclusively related to
financial services and investment and which, pursuant to our by-laws, may not
carry out transactions described in the Financial Entities Law (Ley de Entidades
Financieras). Therefore, it is not our intention to compete with Banco Galicia.
Rather, we seek to broaden and complement Banco Galicia's operations and
businesses through holdings in companies and undertakings whose objectives are
related to financial activities. Consequently, we operate in financial and
related activities that Banco Galicia cannot carry out or in which it can only
participate in a limited way, or in those activities that would not be
profitable for the Bank, due to current regulations.

Important Events in Our Business are detailed under the section "Recent
Initiatives and Investments" below.

CAPITAL INVESTMENTS AND DIVESTITURES

GRUPO GALICIA

During 2002, Grupo Galicia made capital contributions in the amount of Ps.4.2
million to Net Investment S.A. For 2002, Grupo Galicia had budgeted investments
for US$3.0 million to be assigned to Net Investment S.A. No investments were
budgeted for Sudamericana Holding S.A. or Galicia Warrants.

For 2003, Grupo Galicia has budgeted capital investments in an amount of Ps.3.2
million to be applied to Net Investment S.A. There are no capital investments
budgeted for Sudamericana Holding S.A. or Galicia Warrants.

During 2001, Grupo Galicia made the following capital investments:

     -    Banco Galicia: During 2001, the aggregate amount invested in Banco
          Galicia was Ps.5.42 million represented by open market purchases
          of common shares.

     -    Net Investment S.A.: During 2001, Grupo Galicia made Ps.5 million in
          capital contributions.

     -    B to B Comercial: On November 12, 2001, Grupo Galicia and Banco
          Galicia jointly contributed to Net Investment S.A. all their interests
          in BtoB Comercial S.A., in order to participate in the business to be
          conducted by Tradecom International N.V., a company that will
          concentrate 100% of the capital stock and

                                      -26-

<PAGE>

          voting rights of BtoB Comercial S.A. In addition, during 2001, Grupo
          Galicia contributed Ps.0.61 million to BtoB Comercial S.A.

     -    Sudamericana Holding S.A.: In September 2001, Grupo Galicia made a new
          investment in the insurance business by acquiring from Hartford Life
          International Ltd. (U.S.A.) and Hartford Life Ltd. (Bermuda), 50% of
          the capital stock and voting rights of Sudamericana Holding S.A. As a
          result of this transaction, Grupo Galicia took its interest in that
          company to 87.50%, while the remaining 12.50% continues to be held by
          Banco Galicia. The investment above amounted to Ps.20.86 million.

BANCO GALICIA

During 2002, the Bank's total capital expenditures totaled Ps. 55.7 million,
distributed as follows:

Ps. 12.8 million in fixed assets;
Ps. 23.4 million in construction in progress; and
Ps. 19.5 million in intangible assets.

During 2002, the Bank did not make any significant investment or divestiture.

During 2001, the Bank's total capital expenditures totaled Ps. 225 million,
distributed as follows:

Ps. 78.4 million in fixed assets;
Ps. 37.8 million in construction in progress; and
Ps. 108.8 million in intangible assets.

In October 15, 2001, the Bank acquired assets and liabilities from ABN AMRO Bank
Argentina's retail division, principally deposits, mortgage loans, credit cards
and insurance policies. The price paid by Banco Galicia was US$46 million, of
which US$42 million were paid in cash and the remaining US$4 million through an
agreement to distribute ABN AMRO's financial products. Banco Galicia acquired 22
branches and 270 employees. In addition, the Bank incorporated US$151.1 million
in net loans and US$358.2 million in deposits.

During the quarter ended June 30, 2001, through Net Investment S.A. (26.67%),
Grupo Galicia and Banco Galicia, reached an agreement with Unibanco of Brazil
(53.3%) and Portugal Telecom (20%), to form Tradecom International, a business
whose purpose is to develop electronic commerce in the Mercosur area.

On March 21, 2001, Banco Galicia's Board of Directors decided to sell the Bank's
equity interest in Banco Barclays e Galicia S.A. (10,449,541 shares), under the
terms of a public tender offer that took place in Brazil and was made by
Barclays Bank plc to purchase all of Banco Barclays e Galicia S.A.'s shares. The
price set by Barclays Bank plc was R$5.77 (5.77 Brazilian Reais) per share,
equivalent to Ps.2.67 per share (equivalent to Ps.5.83 per share in constant
pesos of December 31, 2002) at the March 19, 2001 exchange rate of R$2.165 per
peso. The acquisition price was adjusted for inflation in Brazil (as measured by
the Monetary Correction Rate variation) between the shareholders' meeting date
and the payment date. As of December 31, 2000, Banco Galicia's 22.71% interest
in Banco Barclays e Galicia S.A.'s book value was Ps.78.2 million. The tender
offer was concluded in August 2001.

In March 2001, the Bank made a capital contribution of Ps.1.8 million to
Sudamericana Holding S.A.

In the six-month period ended December 31, 2000, Banco Galicia's capital
expenditures amounted to Ps. 122.3 million. Capital expenditures of the period
were primarily made in connection with the construction of the new corporate
headquarters, investments in technology, implementation of Banco Galicia's new
corporate image, branch opening and relocation and the build-out of the "Galicia
Ahora" network.

In addition, during the six-month period ended December 31, 2000, Banco Galicia
made the following investments or divestitures in connection with interests in
other companies:

     -    Ps.5.7 million were invested for the acquisition of a 12.5% interest
          in Sudamericana Holding S.A. in December 2000 and further capital
          contributions to the company.

                                      -27-

<PAGE>

     -    Ps.0.9 million were invested for the acquisition of a 12.5% interest
          in Net Investment S.A. and further capital contributions, between
          September and December 2000.

     -    The Bank signed an agreement to sell 100% of its 12% interest in
          Inverdersa in two steps. In December 2000, the Bank sold 49% of its
          equity stake in Inverdersa for Ps.25.8 million. The remaining 51% was
          sold in June 2001.

     -    In December 2000, the Bank sold its 12.5% interest in Galicia Vida
          Compania de Seguros S.A. for Ps.3.3 million.

During the year ended June 30, 2000, Banco Galicia's capital expenditures
amounted to Ps. 219.5 million compared to Ps.173.7 million and Ps.153.8 million
in the years ended June 30, 1999 and 1998, respectively. Capital expenditures in
each of the years mentioned were made primarily to complete ongoing branch
openings, relocations and upgrades, develop new business support systems and
introduce new technology in order to improve service and function automation.

During the year ended June 30, 2000, the Bank made the following investments or
divestitures in connection with interests in other companies:

     -    In September 1999, Tarjetas Regionales S.A. sold 17% of its interest
          in Tarjetas del Mar S.A. for Ps.4.8 million.

     -    In January 2000, Tarjetas Regionales S.A. acquired 47.5% of Tarjetas
          del Sur S.A. for Ps.15.3 million.

     -    In July 1999, through Galicia Pension Fund Ltd., Banco Galicia
          acquired a 99.9% interest in Galicia Administradora de Fondos S.A.
          Sociedad Gerente de Fondos Comunes de Inversion for Ps.6.6 million.

The Bank has budgeted capital expenditures for the fiscal year ended December
31, 2003 for the following purposes and amounts:

<TABLE>
<S>                                                         <C>
Hardware, Software and System Maintenance                   Ps. 14.3 million
Construction of the Banco Galicia Tower                     Ps. 10.3 million
Other                                                       Ps.  0.9 million
                                                            ----------------
Total                                                       Ps. 25.5 million
</TABLE>

STRATEGY

The main objective of Grupo Galicia is to be one of Argentina's leading
comprehensive financial services companies while continuing to strengthen Banco
Galicia's position as one of Argentina's leading banks. Its holding company
structure enhances the opportunity to compete more effectively and to enter into
new finance-related businesses (that are restricted to banks by the applicable
regulatory framework), such as Internet-based ventures, and to profit from the
trends in the financial industry worldwide. We can summarize our strategy into
six main points:

          -    Establish a platform to enhance value for our shareholders and
               customers: by facilitating the creation of autonomous businesses,
               the platform enables Grupo Galicia to leverage the experience and
               knowledge of the market and of its different companies, in a more
               targeted and efficient manner. Furthermore, the current platform
               will provide the Group with a great flexibility to react to
               market trends and to respond rapidly to client needs with respect
               to new products, markets and distribution channels.

          -    Take advantage of the maximum flexibility to enter into potential
               strategic alliances: by organizing certain of our business lines
               into separate subsidiaries, we will optimize the potential for
               strategic alliances in the Group's businesses. This will provide
               additional flexibility to develop new businesses in the most
               effective manner.

          -    Obtain appropriate levels of participation in certain high growth
               businesses and take advantage of the potential cross-selling
               opportunities: The Argentine Central Bank limits the ability of
               financial institutions to make investments in subsidiaries that
               develop activities that are considered "non-complementary" to
               banking activity. Grupo Galicia believes that some of these
               businesses have future

                                      -28-

<PAGE>

               growth potential in Argentina. Grupo Galicia, unlike Banco
               Galicia, has no limits on its investments in "non-complementary"
               businesses, such as insurance and new industries such as
               Internet-based ventures. Moreover, Grupo Galicia has established
               controlling interests in some of these businesses to leverage
               Banco Galicia's and other companies' customer bases into
               cross-selling opportunities.

          -    Establish a corporate structure by business units: the Group
               intends to create an appropriate corporate structure aligned to
               the evolution of our several business sectors. Grupo Galicia
               expects that this will allow a more accurate assessment of
               sources of income and cost control, facilitate benchmarking of
               those businesses against other similar ones and therefore,
               facilitate the Group's commercial effectiveness and its
               efficiency in the use of resources.

          -    Optimize the capital structure of the Group's subsidiaries: with
               a structure of separate subsidiaries, we can allocate capital
               more effectively by designing optimal capital structures for our
               subsidiaries and, therefore, reducing their cost of capital and
               investment and further expanding their growth.

          -    Adapt the business to current economic conditions: Since January
               1, 2002, economic, financial and business conditions have
               radically changed in Argentina. Grupo Galicia is making its best
               efforts to finance its controlled companies with their own
               respective cash flows, and to minimize the need for any cash
               contributions. In addition, Grupo Galicia has suspended the
               payment of any cash dividends in order to preserve an appropriate
               level of liquidity in order to fund its own expenses and existing
               projects.

INITIATIVES AND INVESTMENTS

SUDAMERICANA HOLDING S.A.

Sudamericana Holding S.A. is a group of life and retirement insurance companies.

In September 2001, Grupo Galicia made a new investment in the insurance business
by acquiring from Hartford Life International Ltd. (U.S.A.) and Hartford Life
Ltd. (Bermuda), and 50% of the capital stock and voting rights of Sudamericana
Holding S.A. As a result of this transaction, Grupo Galicia increased its
interest in that company to 87.50%, while the remaining 12.50% continues to
belong to Banco Galicia.

The insurance business undertaken by Grupo Galicia through its interest in
Sudamericana Holding S.A. is part of its strategy to strengthen its position as
a leading financial services provider, thus supplementing those businesses which
Banco Galicia may only conduct to a limited extent in line with prevailing
regulations.

Total written premiums of all the companies controlled by Sudamericana Holding
during this fiscal year represented 3% of the Argentine individuals' insurance
market, being ranked in the tenth place among Argentine life-insurance
companies. Sudamericana Holding's companies had 1,415,601 insureds and managed
40,155 policies as of December 31, 2002.

In 2002, the company continued with the cost-cutting program started during the
previous fiscal year. The streamlining of its organizational structure
significantly contributed to the general efficiency improvement.

Sudamericana Holding S.A. plans to focus on the following actions to be the core
of its operations during the 2003 fiscal year.

-    Reinforcement of measures aimed at improving operating efficiency and
     expense control.

-    Increase in the volume of premiums.

-    Company repositioning to concentrate on the middle-income niche.

                                      -29-

<PAGE>

-    Marketing focus on the independent broker's channel, supplemented by the
     use of the distribution networks of the Group's subsidiaries.

In order to address the adverse financial consequences caused by the "asymmetric
pesification" of dollar-denominated liabilities and assets of Sudamericana
Holding's subsidiary Galicia Retiro, Galicia Retiro has submitted to the
Argentine Superintendency of Insurance a plan to reprogram the repayment
schedule of its dollar-denominated annuities that were affected by the
"asymmetric pesification" in order to avoid a potential liquidity shortfall in
the repayment of such liabilities. Such plan was approved by the Argentine
Superintendency of Insurance on June 12, 2003. On June 30, 2003, Galicia Retiro
launched its exchange offer for the reprogrammig, which expires on July 31,
2003. The exchange offer may be extended, at Galicia Retiro's option, for an
additional 15-day period.

NET INVESTMENT S.A.

Grupo Galicia carries out its Internet businesses primarily through Net
Investment S.A., a holding company dedicated to investing in and developing
technology- and Internet-related businesses. Grupo Galicia and Banco Galicia own
87.5% and 12.5%, respectively. On an ongoing basis, Net Investment evaluates new
business opportunities related to electronic commerce between businesses,
individuals and governmental agencies, mobile payment solutions, content and
connectivity services and electronic services for businesses. It also evaluates
opportunities related to the development of high-bandwidth Internet projects and
content for wireless and satellite technology services. In all cases, it seeks
to create and benefit from synergies with Banco Galicia's operations.

Net Investment's primary purpose is to become a participant in e-business, not
only through capital investments but also through the development of activities
that can contribute to Banco Galicia's and Grupo Galicia's comprehensive
business structure, thereby providing a comparative advantages of the group's
companies or of their business units.

The three businesses developed by Net Investment S.A. during this fiscal year
were: Tradecom, Red de Campo and Soloduenos. Through its 16.19% indirect
ownership in Tradecom International N.V., Net Investment renders support
services to B2B e-commerce and to virtual markets for transactions between
companies and suppliers in Argentine, Brazil and Uruguay. Red Campo is the trade
name for B2Agro S.A., a service company that provides solutions to all the
participants in the agricultural and livestock production chain in order to
facilitate their management, the making of deals and integration, by grouping
and interconnecting them. Under the trade name of Soloduenos, the company Dueno
Vende S.A. began operations in May 1999, providing a database of available real
estate properties. On April 21, 2003, due to the adverse current market
conditions and the lack of business opportunities, the shareholders of Dueno
Vende S.A. decided to liquidate Dueno Vende S.A.

GALICIA WARRANTS S.A.

Galicia Warrants S.A. was founded in April 1993, when it obtained authorization
granted by the former Commerce and Investments Secretariat to store goods and
issue certificates of deposit of goods and warrants, under the provisions of Law
9,643, both regarding its own deposits and third-party deposits. On August 30,
2001, Grupo Galicia acquired 87.50% of the capital stock and voting rights of
Galicia Warrants S.A., a company in which Banco Galicia holds the remaining
12.50% interest.

Galicia Warrants S.A. is a leading company in the goods-deposit certificates and
warrants issuance market, in which it has continuously conducted transactions
since 1994, supporting medium and large companies as regards the custody of
stocks. The corporate purpose of Galicia Warrants is to facilitate access to
credit and financing, secured by goods that remain under its custody. Its
principal customers belong to the agricultural, industrial and agroindustrial
sectors, as well as exporters and retailers.

In 2002 Galicia Warrants S.A. has rendered property custody and control services
to more than 600 companies in more than 800 warehouses distributed throughout
the country, with the highest business concentration in the central region of
Argentina known as "Pampa Humeda", where the best land is located.

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Even though the livestock and agricultural sector is the one that most requires
this credit instrument, it has also been highly required by most of the
activities of the regional economies and, to a lesser degree, by the industrial
sector. By means of the opening of an office in the city of Tucuman, the company
aimed at rendering a better service in the northwest region, placing special
focus on the sugar-producing sector. To that end, it has leased warehouses that
provide all the quality and safety assurance to the service to this demanding
sector.

Galicia Warrants owns a plant at San Salvador, Province of Entre Rios, for the
conditioning and storage of 40,000 tons of paddy rice and other products, which,
since the time it began operations in 1998, has provided a high-quality service.

During the fiscal period ended April 2003, the volume of transactions amounted
to US$34.71 million, with a revenue of Ps.3.87 million (based on non audited
numbers).

BANCO GALICIA

In December 2001, the continuing recession in Argentina deepened into an
unprecedented political and economic crisis. The crisis and the measures taken
to resolve it have radically changed the environment for the financial business
in Argentina with respect to that prevailing until December 2001. These events
have materially and adversely affected our business. The following discussion
should be read in conjunction with, and is qualified in its entirety by, "Risk
Factors" and "Main Regulatory Changes in 2002 and 2003" in this annual report.

As of December 31, 2002, the Bank was one of the largest private sector
commercial banks in Argentina as ranked by its consolidated assets, net loans,
deposits and shareholders' equity as of December 31, 2002. As of December 31,
2002, the Bank's consolidated assets amounted to Ps.23,550 million, its
consolidated net loans to Ps.10,535.1 million, its consolidated deposits
amounted to Ps.5,196.7 million and its shareholders' equity amounted to
Ps.1,538.3 million. For the last two years the Bank has been operating in an
economy that has experienced significant economic difficulties, including a four
year recession, high inflation and a significant deterioration in the financial
situation of the government, private corporations and businesses and
individuals. The environment in these years has also included a significant
political instability and a radical change in the regulatory framework for doing
business in Argentina in general and for the financial system in particular. Due
to this environment, the Argentine financial system and the Bank suffered a run
on deposits in 2001 and during the first half of 2002. The Bank's deposits were
Ps.19,604.7 million as of December 31, 2000 and Ps.13,572.2 million as of
December 31, 2001. As of December 31, 2002, the Bank's estimated market share,
based on deposits held in Argentina, was 5.26% of the financial system's total
deposits, including the amounts of Banco Galicia's deposits exchanged for
government bonds in the first government voluntary exchange offer for
restructured deposits for government bonds (known as the "Canje I"), and 4.38%
of the financial system's "free" deposits (excluding all restructured deposits)
as compared to 7.30% in the prior year and 10.09% as of December 31, 2000. Due
to the above mentioned environment (described in more detail in other sections
of this annual report) the Bank has suffered losses in fiscal 2002 that have
caused a decrease in its shareholders' equity from Ps.3,063.6 million as of
December 31, 2001 to Ps.1,538.3 million as of December 31, 2002.

Traditionally, the Bank has principally engaged in commercial banking and
provided a wide variety of banking products and services to large corporations,
medium-and small-sized companies and individuals. Depending on the type of
customer, such services have included personal and corporate loans,
deposit-taking, credit and debit cards, residential mortgage loans, fiduciary
and custodial services and electronic banking. The Bank has also been involved
in other finance-related businesses, such as investment banking, insurance
distribution and asset management. The Bank's operations have been materially
and adversely affected by Argentina's 2001 and 2002 economic and financial
crises. In 2002, the Bank was not involved in any significant financial
intermediation, investment banking or project finance activity.

The Bank provides its services through one of the most extensive and diversified
distribution platforms of all private-sector banks in Argentina, comprising as
of December 31, 2002, 227 full-service branches in Argentina allowing for a
nation-wide coverage, 660 ATM's and other electronic banking facilities such as
phone-banking and e-banking facilities. As of December 31, 2002, the Bank's
branch network covered all of the Argentine provinces, except for Tierra del
Fuego, and all the main cities of the country.

                                      -31-

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Until December 2001, the Bank had conducted significant banking activities
overseas through its subsidiaries Banco Galicia Uruguay S.A., Banco de Galicia
(Cayman) Ltd. and Galicia Securities (UK) Ltd., branches in New York and the
Cayman Islands, and representative offices in Sao Paulo (Brazil) and London
(United Kingdom). The Bank's international operations have been materially and
adversely affected by Argentina's economic and financial crises in 2001 and 2002
and, as a result, have been suspended or wound down.

During 2001, it became increasingly apparent that the Argentine public sector
(including provincial governments) would no longer be able to refinance its debt
payments as they matured, including amounts due to Argentine banks. This made it
more and more difficult, and ultimately impossible, for Argentine companies and
financial institutions to access the international financial markets, in order
to repay or refinance liabilities as they matured. Such inability to access the
international financial markets resulted from, among other factors, the growing
market perception that a sovereign-debt default was highly likely and such
occurrence would adversely affect the ability of local private-sector debtors,
such as the Bank, to make payments or transfers of foreign currency abroad. In
addition, due to depositors' fears that the government's financial crisis would
ultimately adversely affect the Argentine financial system, the Argentine
financial system experienced several episodes of large deposit runs that led the
government to enforce, on December 3, 2001, restrictions on cash withdrawals
from bank deposits, otherwise known as the "corralito," as well as controls over
the FX market and capital movements. As a result of all of these factors, in
late 2001, the financial system and the Bank suffered a severe liquidity crisis.
The Argentine Central Bank, in its capacity as lender of last resort, provided
financial assistance to the financial system, including the Bank, mostly between
late 2001 and mid 2002.

In an effort to solve its lack of liquidity, the Bank analyzed several
alternatives and on March 21, 2002, filed the "Galicia Capitalization and
Liquidity Plan" (the "Plan") with the Argentine Central Bank. On February 8,
2002, the Argentine Central Bank designated two officers from the Argentine
Central Bank to supervise the management of the Bank's operations. The Plan was
accepted by the Board of Directors of the Argentine Central Bank on May 3, 2002.
For a summary of the Plan and of the progress made by the Bank in implementing
it, see "--Galicia Capitalization and Liquidity Plan." After the initial
increase in the Bank's cash position tied to the implementation of the Plan, and
in the context of the renegotiation of its external debt, between the
implementation of the Plan and the date hereof, the Bank has stabilized and
rebuilt its liquidity position, without requiring any financial assistance from
the Argentine Central Bank.

As a part of restructuring its foreign debt, the Bank finalized the
restructuring of the liabilities of its New York Branch in 2002. During 2002,
the restructured liabilities of the New York Branch were transferred to the
Bank's head office in Argentina and the New York Branch was closed on January
30, 2003. Currently, formal negotiations are being held with foreign creditors
to restructure the foreign debt of the Bank's head office in Argentina and that
of its Cayman Branch. We can give you no assurance that the Bank will be able to
complete the restructuring of its foreign debt, or that by doing so it will
completely resolve the problems affecting its operations.

During 2002, the Bank had to face the impact on its wholly-owned subsidiary in
Uruguay, Galicia Uruguay, of the events that took place in Argentina since late
2001 and during 2002, and especially the effects of the establishment of the
"corralito" in December 2001 in Argentina. These events impacted negatively on
depositors' confidence in the Uruguayan financial system, these depositors being
to a large extent Argentine residents, generating a massive run on Galicia
Uruguay's deposits. Given its inability to continue meeting the large and
continuous deposit withdrawals with its own liquidity, Galicia Uruguay requested
from the Central Bank of Uruguay an approval to suspend its activities in order
to permit the orderly rescheduling of its liabilities, mostly comprised of US
dollar-denominated deposits. On February 13, 2002, the Central Bank of Uruguay
suspended Galicia Uruguay's activities and assigned an intervenor to oversee its
management and subsequently to replace its statutory authorities. In order to
obtain approval by the Uruguayan Commercial Courts of an agreement with its
creditor and in the context of a provisional moratorium requested before such
courts, on June 10, 2002, Galicia Uruguay presented to the Central Bank of
Uruguay a restructuring proposal to be made to its creditors. The proposal was
accepted by more than 79% of deposit holders and, therefore, the minimum 75%
majority required by Uruguayan Law to validate an extrajudicial agreement was
obtained. On December 23, 2002, the judge in charge of the Court of Montevideo
which oversees the case, approved Galicia Uruguay's proposal to repay, in
dollars, 100% of its deposits. In early 2003, Galicia Uruguay began making the
first cash disbursement contemplated in the restructuring proposal. It is the
Bank's intention to continue the operations of its Uruguayan subsidiary. See
"--Galicia Capitalization and Liquidity Plan."

                                      -32-

<PAGE>

As occurred with the entire financial system in Argentina, since December 2001
the Bank's business activities have substantially contracted compared to
historical levels, in light of the financial system's liquidity crisis of late
2001 and the economic and political environment prevailing in Argentina in 2002.
Between December 2001 and mid-2002, the Bank suspended origination of most types
of loans, its deposit-taking essentially ceased and its international operations
were substantially affected. Some of its international operations were suspended
or wound down or are in the process of being wound down. However, the Bank's
deposits and those of the Argentine financial system began to grow again in the
second half of 2002. In addition, the increase in the Bank's liquidity has
allowed it to resume, within the current applicable regulations, certain credit
activities on a selective basis. However, this activity has been limited.

Within the Plan measures, the Bank redesigned and streamlined its organizational
structure and reduced its distribution network, staff and operating expenses.
The Bank will continue analyzing the focus of the business lines after the
volatility experienced by the Argentine economy and the regulatory framework
during the first half of 2002 settles and after the impact of such volatility on
the Bank and the Argentine financial system becomes more clear.

BANCO GALICIA'S STRATEGY

In 2002 the Bank reevaluated which products and services to offer to its
different customer bases in the new environment affected by the economic and
political crisis and the economic policy measures implemented by the government
since late 2001. The Bank's business strategy was redefined in reaction to these
events, described in more detail in other sections of this annual report. See
"Item 3. Key Information--Risk Factors," "--Main Regulatory Changes in 2002 and
2003--The Argentine Economy in 2002" and "--The Argentine Financial System in
2002."

Financial Strategy. In 2002 the Bank focused on:

          (i) the implementation of the Galicia Capitalization and Liquidity
          Plan, described below;

          (ii) dealing with its portfolio of non-performing loans, an issue
          which continues to be dealt with;

          (iii) providing for an adequate coverage of the non-accrual loan
          portfolio and other losses and contingencies, an issue that continues
          to be a component of the Bank's strategy;

          (iv) pursuing the recovery of assets in order to generate liquidity,
          an issue that continues to be a priority as well, despite the
          improvement in the Bank's liquidity ratios in the second half of 2002;

          (vi) achieving a significant reduction in its administrative expenses
          (as mentioned below under the "Galicia Capitalization and Liquidity
          Plan" heading, in 2002 the streamlining of its organizational
          structure and administrative expenses, in order to adapt its expenses
          to a lower level of activity, was one of the components of the Plan).

Business Strategy. The developments that took place in Argentina since late 2001
and 2002 have significantly impaired the financial system's ability to act
directly as an intermediary between the public's savings and the supply of
credit. This situation is not expected to change in the short term.

Thus, the Bank directed its efforts towards:

          (i) establishing an operation adapted to the new financial business
          environment, that is, an operation more focused on the generation of
          fees from the provision of a variety of transactional services, that
          would benefit from the cost reductions achieved and which continues to
          be strongly focused on cost control;

          (ii) regaining deposit market share; and

          (iii) achieving and maintaining high liquidity levels.

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<PAGE>

The Bank's strategy was based on a clear segmentation of its client base and the
redefinition of target segments. In addition, the Bank's strategy was also based
and continues to be based on strengthening and creating competitive advantages
that can be sustained over time, such as the quality of service, operational
efficiency and discipline, the knowledge of its clients and the flexibility of
its human resources.

To generate revenue the Bank is concentrating on the provision of transactional
financial services such as the management of means of payment (with emphasis in
electronic means of payment, debit cards and its transactional "on-line"
capacity), the supply of banking accounts and deposit raising associated with
customers' transactional needs, credit card activities, and the buying and
selling of foreign currency and quasi-moneys. The Bank has put in place several
initiatives aimed at increasing its income from services and its deposit base at
the same time. In this effort, the Bank relies on several strengths that were
not affected by the significant adjustement carried out in 2002. In spite of
this, the Bank's competitive capacity remains intact:

-    The Bank retains a significant share of the financial system's deposits and
     a leading position as a provider of transactional and electronic banking
     services, which currently are, and are estimated to continue to be in the
     medium term, the core of financial activity in the Argentine financial
     system.

-    The restructuring of the Bank's branch network did not result in a
     significant loss of customers, apart from that caused by the events
     occurring since the end of 2001. The Bank's customer base (on a
     consolidated basis with the regional credit card companies) comprises
     approximately 2.3 million customers. This restructuring was designed to
     allow the Bank to keep its nation-wide coverage, therefore, the Bank's
     distribution platform continues to be one of the most extensive and
     diversified distribution platforms of the Argentine financial system.

-    Similarly, past technology investments currently enable the Bank to offer
     one of the best electronic-banking services of the country, to process a
     large volume of transactions and to efficiently use the information
     available in its database.

-    The Bank also relies on a wide product offering that is being adapted to
     the new context and includes technology-based services.

One of the main objectives of the Bank is to increase the coverage of its cash
operating expenses with fee income. The Bank monitors its performance with
respect to such objective by using the ratio of feee income to operating
expenses plus expenses for services (with operating expenses defined as the
administrative expenses recorded in the Bank's income statement net of
depreciation and amortization expenses and restructuring charges, and redefining
fee income as that in the Bank's income statement less financial fees plus fees
from foreign exchange brokerage). This ratio increased from approximately 63% in
December 2001 to approximately 73% in fiscal 2002.

The increase in the Bank's deposits and liquidity has allowed it to resume,
within the current applicable regulations, certain credit activities, on a
selective basis. However, given the current conditions of the financial markets
in Argentina, the Bank expects its lending activity to be limited in the near
future.

GALICIA CAPITALIZATION AND LIQUIDITY PLAN

On March 21, 2002, the Bank submitted to the Argentine Central Bank the "Galicia
Capitalization and Liquidity Plan." The main components of the Plan were: (i)
the immediate restoration of the Bank's liquidity through the provision of cash
in amounts sufficient to allow the Bank to reimburse a significant portion of
its demand deposits without having to request financial assistance from the
Argentine Central Bank; (ii) an increase in the Bank's capitalization in the
context of the negotiations with foreign creditors to restructure the Bank's
debt with such creditors; (iii) the orderly winding down of the Bank's operating
units abroad; and (iv) the streamlining of the Bank's organizational structure
and administrative expenses in order to adapt its operations to levels of
activity that were lower than those experienced in the recent past. The Plan
also included a temporary exemption from compliance with certain applicable
technical ratios and the reduction of the charges or fines arising from any
non-compliance incurred or to be incurred, before implementing the Plan,
pursuant to the provisions of Law No.21,526

                                      -34-

<PAGE>

(Financial Institutions' Law). The Plan was approved, by the Board of Directors
of the Argentine Central Bank on May 3, 2002.

Liquidity

The initial increase in the Bank's liquidity, after the launch of the Plan, was
a result of:

-    the securitization (and/or sale) of mortgage and commercial loan portfolio,
     in exchange for cash for a total of Ps.400 million (in pesos of May 2002),
     through the sale to, or the transfer of loans to trusts that issued notes
     subscribed by, domestic financial institutions during April and May 2002. A
     minor portion of this amount consisted of the repayment of a loan by a
     local bank.

-    a loan from Sedesa for the US dollar amount equivalent to Ps.200 million
     (in pesos of May 2002) at the exchange rate prevailing on the day prior to
     that of the disbursement (US$64.5 million), with a five-year term and an
     interest rate equal to the 180-day LIBOR rate plus 300 basis points.

-    a loan from the Fondo Fiduciario de Asistencia a Entidades Financieras y de
     Seguros (the "Fiduciary Fund for the Assistance to Financial Institutions
     and Insurance Companies" or the "FFAEFyS") for the US dollar amount
     equivalent to Ps.100 million (in pesos of May 2002) at the exchange rate
     prevailing on the day prior to that of the disbursement (US$32.3 million),
     with a three-year term and an interest rate equivalent to the 180-day LIBOR
     plus 400 basis points, with a floor of 8.07%.

In addition, a Ps.574 million loan (in pesos of May 2002) from the Bank
Liquidity Fund (Fondo de Liquidez Bancaria) was restructured by extending its
maturity to three years. This loan was canceled after the implementation of the
Plan by means of an advance from the Argentine Central Bank.

After the above mentioned initial increase in the Bank's cash position, and in
the context of the renegotiation of its external debt, after the implementation
of the Plan, the Bank has rebuilt and stabilized its liquidity position without
requiring any financial assistance from the Argentine Central Bank. As of
December 31, 2002, the liquid assets of Banco Galicia (excluding those of its
Cayman Branch) on an unconsolidated basis amounted to 53.1% of its transactional
deposits (deposits in current and savings accounts), to 28.9% of its free
deposits (excluding restructured deposits) and to 17.1% of its total deposits in
Argentina only. Liquid assets include: (i) cash, (ii) the balance of the Bank's
current account at the Argentine Central Bank, (iii) the balance of special
escrow accounts held by the Bank at the Argentine Central Bank in favor of
clearing houses, (iv) holdings of Lebac, short-term Argentine Central Bank
notes, and (v) overnight deposits in financial institutions.

New York Branch and Operating Units Abroad

In accordance with the Plan, during 2002, the liabilities of the Bank's New York
Branch were restructured as a necessary step for the orderly winding down of its
affairs. The New York Branch was closed on January 30, 2003.

On March 22, 2002, the "New York Branch Restructuring Plan" was submitted to the
US Treasury's Office of the Comptroller of the Currency ("OCC"). This plan
contemplated the voluntary and orderly winding down of the New York Branch
affairs and its ultimate closing, after: i) the payment of the New York Branch's
small deposits; ii) the restructuring of its third party liabilities; and iii)
the transfer to the Head Office in Argentina of the restructured debt. As of
March 31, 2002, the New York Branch had third party liabilities totaling
approximately US$330 million. Between that date and mid 2002 the restructuring
of most of the New York Branch's debt had taken place. At the close of the 2002
fiscal year, the restructuring of all of the New York Branch's debt with third
parties had concluded.

The restructuring of the New York Branch's debt consisted of the restructuring
of short-term commercial debt in the amount of US$51 million, through a 20% cash
payment and the transfer of the remaining 80% to the Bank's head office in
Argentina. At the close of 2002, all of such debt has been repaid. From the
approximately US$237 million of financial debt, US$125.5 million was
restructured as head office debt, with a 5-year maturity and a 2-year grace
period, US$68.9 million was paid in cash, and US$42.6 million was cancelled. Of
the US$30 million in deposits,

                                      -35-

<PAGE>

the Branch paid US$12.5 million small deposits in cash and restructured US$17
million as debt of the head office in Argentina. The remaining liabilities,
mainly trade-related contingencies, were transferred to the Bank's head office
in Argentina.

In addition, in accordance with the Plan measures, the Bank's representative
offices in Sao Paulo (Brazil) and London (UK), as well as the Bank's security
house incorporated in the United Kingdom, Galicia y Buenos Aires Securities (UK)
Ltd., have also been closed during the second half of 2002.

Restructuring of the Head Office's and of its Cayman Branch's Foreign Debt

On June 12, 2002, the Bank announced the restructuring of all of its debt with
foreign creditors under the framework of the Plan. Within this framework, the
repayment of the Bank's debt with foreign creditors has been postponed until
such debt is restructured. At the same time, the Bank announced that it had
hired an international investment bank as advisor in the restructuring process.

With respect to the restructuring of the head office's and the Cayman Branch's
foreign debt, the Bank formally began negotiations with a steering committee
that was established by the Bank's largest creditors in August 2002. The Bank is
currently progressing in the restructuring process and in defining a
restructuring proposal.

The restructuring of the Bank's external debt is a complex process due to the
amount, number of creditors and variety of debt instruments involved. In
addition, the process has been complicated by the uncertainty prevailing in
Argentina during 2002. See "Item 3. Key Information--Risk Factors."

Capitalization

The Plan contemplates the Bank's capitalization as an integral part of the
restructuring of its foreign debt.

Cost Reduction

Within the Plan's measures, the Bank made significant progress in the
streamlining of its organizational structure and of its administrative expenses
in order to adapt to the new economic and regulatory context that characterized
fiscal year 2002. For this, during 2002, the Bank reduced its branch network in
Argentina by 61 branches, equivalent to 21.1% of the branches existing as of
December 2001 and the Galicia Ahora network that, as of that date, consisted of
118 service centers, was fully absorbed by the Bank's branch network. Also,
through voluntary mechanisms and with a Ps.130 million aggregate cost, during
2002 the number of the Bank's employees (excluding consolidated subsidiaries)
decreased by 1,804 or 30.7% of the Bank's staff (excluding consolidated
subsidiaries) as of December 31, 2001. In addition, all rental contracts, and
contracts with suppliers of systems, communication and other services were
renegotiated. As a result, during fiscal year 2002, the Bank (on an
unconsolidated basis) achieved savings of administrative expenses, excluding
restructuring charges, of approximately Ps.330 million in constant pesos of
December 2002, as compared with the previous year's administrative expenses,
representing a 34% decrease in real terms.

Banco Galicia Uruguay S.A. and Banco de Galicia (Cayman) Ltd.

         Galicia Uruguay

The developments in Argentina, and most importantly the "corralito", resulted in
the deterioration of the public's confidence in Argentine banks. This impacted
negatively on depositors' confidence in Galicia Uruguay, prompting a massive run
on Galicia Uruguay's deposits beginning in mid-December 2001. This run was faced
with the liquidity of such subsidiary.

On February 6, 2002, Galicia Uruguay submitted a letter to the Central Bank of
Uruguay in order to i) communicate its situation of temporary lack of liquidity,
which prevented it from continuing to face the withdrawal of deposits; ii)
request financial assistance in order to preserve its ability to reimburse all
of its deposits in an orderly manner and

                                      -36-

<PAGE>

face the withdrawals, substantially caused by the developments that had occurred
in Argentina; or iii) request the authorization to temporarily suspend its
activities.

On February 13, 2002, the Central Bank of Uruguay appointed an intervenor to
oversee Galicia Uruguay's management and authorized the total suspension of its
activities for a 90-day period, which was extended subsequently. At the date
hereof, the activities of Galicia Uruguay are still suspended and its statutory
authorities have been replaced by such intervenor.

In order to obtain an agreement with its creditors approved by the Uruguayan
Commercial Courts and in the context of a provisional moratorium requested
before such Courts, on June 10, 2002, Galicia Uruguay submitted to the Central
Bank of Uruguay a proposal to restructure its liabilities. The proposal
consisted of an initial cash payment in dollars equivalent to 3% of the credit
balance of each creditor and, for the remaining balances and, at the creditors
election, a time deposit or negotiable obligations issued by Galicia Uruguay,
both maturing on September 2011, with principal amortization in nine annual
installments (the first two for the 15% of the remaining balance and the
following ones for 10% of such balance) and a 2% fixed annual interest rate. On
June 18, 2002, the Central Bank of Uruguay informed the Bank that it would not
oppose any restructuring solution that the Bank would agree with Galicia
Uruguay's depositors, subject to the proposal being accepted by at least 75% of
the depositors, the minimum required by the Uruguayan Law to validate an
extrajudicial agreement. On June 20, 2002, the Bank informed the Central Bank of
Uruguay that it was offering a pledge of Galicia Uruguay's commercial loan
portfolio as guarantee of the restructuring proposal presented on June 10, 2002.

Galicia Uruguay's proposal was accepted by 7,067 account holders representing
more than US$930 million in deposits over a total of US$1,176 million held in
12,271 accounts. Measured in terms of balances, this represents a percentage of
acceptance of more than 79%.

On August 26, 2002, the Judge in charge of the Court of Montevideo that oversees
the case accepted the steps taken by Galicia Uruguay in reaching an
extrajudicial agreement with its creditors and granted it a provisional
moratorium that would extend until the end of the process. In addition, the
Central Bank of Uruguay was designated by the above mentioned Court to verify
that the legal majority had been obtained in the agreement. Such verification
was satisfactorily concluded. On December 23, 2002, the Judge approved Galicia
Uruguay's proposal to reimburse, in dollars, 100% of its deposits.

On January 9, 2003, Galicia Uruguay began the payment of the first installment
contemplated by the extrajudicial agreement.

         Banco de Galicia (Cayman) Ltd.

Galicia Uruguay's situation has affected its subsidiary Banco de Galicia
(Cayman) Ltd. As a consequence, on July 19, 2002, at the request of Banco de
Galicia (Cayman) Ltd., the Cayman Islands authorities designated a provisional
liquidator in order to allow a voluntary debt restructuring agreement to be
reached between this subsidiary and its creditors. The restructuring of the
liabilities of Banco de Galicia (Cayman) Ltd. is currently in progress.

In May 29, 2003 the proposal for the restructuring of its liabilities made to
creditors was submitted before the Cayman Islands' Court. The terms of the
abovementioned proposal are the following: an initial cash payment equivalent to
5% of the debt amount for principal and interests to July 18, 2002 plus a
Transferable Certificate equivalent to 95% of the debt amount for principal and
interests to July 18, 2002. The terms of the Certificate are the following:
principal amortization in nine annual installments (the first two for the 15% of
principal and the following ones for 10%), payable on the 21st day after
September 1, 2003; a 2% annual interest rate (the certificate will bear interest
beginning the effective date of the Agreement); and interest payable
semiannually, together with principal, and calculated on the remaining debt
balance.

         Impact of Decree No.214/02 and Complementary Ones

The devaluation in Argentina and the mandatory "asymmetric pesification" of a
portion of Galicia Uruguay's loans that were denominated in US dollars but
subject to Argentine Law, materially and adversely affected Galicia

                                      -37-

<PAGE>

Uruguay's financial condition. This was caused by the fact that Decree No.905/02
excluded from the calculation of the amounts of compensatory and hedge bonds to
which the Bank was entitled the pesified private-sector assets held by the
Bank's controlled companies with complementary activities and by its foreign
branches and subsidiaries. Subsequently, Decree No.2176/02 and Argentine Central
Bank's Communique "A" 3805 revised the compensation calculation to include the
assets held by foreign subsidiaries subject to pesification in accordance with
Decree No.214/02. See "--Main Regulatory Changes in 2002 and 2003--Compensation
to Financial Institutions."

In this context, the Bank has undertaken with Galicia Uruguay to take such
necessary action in order to, in certain circumstances and with the prior
consent of the Argentine Central Bank, make contributions to Galicia Uruguay
that may be required to permit Galicia Uruguay to repay all of its restructured
deposits. Such undertaking was subsequently amended by both parties to clarify
that the direct and indirect legal effects resulting from the representations
and obligations set forth in such undertaking and the enforceability of the
rights assumed thereunder are subject to the prior restoration of the economic
condition of the Bank and the repayment in full of any financial assistance
provided by the Argentine Central Bank to the Bank.

As a result of the intervention by the Uruguayan Central Bank of Galicia
Uruguay, in early 2003, audited financial statements prepared in accordance with
Argentine Banking GAAP were not available for Galicia Uruguay during 2002. For
the foregoing reasons and in complying with the Plan, as disclosed in the Bank's
financial statements for fiscal 2002 prepared in accordance with Argentine
Banking GAAP and published in Feburary 2003, the Bank decided to fully provision
its investment in Galicia Uruguay and its subsidiary Banco de Galicia (Cayman)
Ltd. for the amounts recorded in its books as of December 31, 2001. Likewise,
and for as long as the above mentioned circumstances remained, the Bank deemed
it appropriate to discontinue the line-by-line consolidation of both
subsidiaries' financial statements with those of the Bank. However, the Bank
established a reserve, under the liability account "Provisions--Other
Contingencies", to cover the estimated negative consolidated shareholders'
equity of the two subsidiaries which reserve amounted, as of December 31, 2002,
to Ps.890.3 million.

Subsequently, we received additional information related to the financial
information in Galicia Uruguay and, therefore, in the financial statements
included in this annual report, we consolidated the consolidated financial
statements of Galicia Uruguay, on a line-by-line basis.

In accordance with applicable rules, compensation to the Bank for the effects of
the "asymmetric pesification" on a consolidated basis (but excluding
subsidiaries with complementary activity) was determined in the amount of
US$2,254 million of nominal value of dollar-denominated Boden 2012, of which
US$891 corresponded to Galicia Uruguay. This amount could be subject to
regulatory changes and is at the date hereof subject to the review of the
Argentine Central Bank. The Bank has presented a letter to the Argentine Central
Bank by which it requests the authorization to transfer Boden 2012 to Galicia
Uruguay for an amount equivalent to the net effect of the compensation
determined for Galicia Uruguay (that is deducting from the compensation amount
the amount of the loan to be granted to the Head Office in Argentina, by the
Argentine Central Bank, to purchase the hedge bond). This amount was estimated
at approximately US$438 million. Within the context described, it is the Bank's
intention to continue the operations of its Uruguayan subsidiary, subject to the
applicable rules and authorizations from the monetary authorities of Uruguay.

BANCO GALICIA'S OPERATIONS

Retail Banking

The Retail Banking Group oversees all of the areas that provide financial
services to individuals and manages distribution channels. Banco Galicia
provides a wide range of financial products and services to individuals,
covering both transactions and investments. On the transactions side, Banco
Galicia offers customers checking and savings accounts, credit and debit cards,
foreign exchange brokerage and payroll direct deposit. On the investments side,
its products and services include certificates of deposit, mutual funds, and
insurance products. In addition, Banco Galicia provides credit for the
acquisition of consumer goods and housing through personal loans, residential
mortgages, pledge and credit card loans. During 2002, credit provision was not
significant.

                                      -38-

<PAGE>

         Consumer Banking

Through its extensive retail distribution platform, as of December 31, 2002,
Banco Galicia serviced approximately 2.3 million customers and managed more than
1.6 million credit cards and more than 1 million customer deposit accounts. This
volume makes it one of the largest suppliers of financial products and services
to individuals among Argentine private-sector banks and one of the largest
issuers of credit cards in Argentina.

Since the end of the first quarter of 2002, a period that comprised the worst
moment of the crisis originated in December 2001, the Bank's efforts were aimed
at improving its relation with customers with investment products, providing
them advice on the alternatives created by the government since the
implementation of the deposit restructuring. The results of this action are
shown by the participation of the Bank's customers in the two deposit swaps for
National Government Bonds (Boden), the so-called Canje I and Canje II (the
second government exchange offer, the "Canje II"): 36% and 8%, respectively, of
the total restructured deposits in the Bank, at the beginning of each of the
swaps were tendered. This result, higher than the one achieved by the rest of
the financial system as a whole, originated a competitive advantage for the
Bank, as it considerably reduced the amount of restructured deposits maturities
in the future. In addition, the Bank's customers whose deposits were less than
Ps.10,000 and were offered by the Bank to have their deposits be returned in
cash, decided to leave 84% of their deposits with the Bank.

In the second half of 2002, together with the improvements in the financial
system as a whole, the Bank implemented a fund-raising strategy aimed at the
retail sector as a result of which it showed an increase in its market-share of
voluntary deposits (deposits in current accounts and savings accounts and new
non-restructured time deposits). In the second half of 2002 the Bank increased
its estimated market share of total voluntary time-deposits in the Argentine
system from 3.31% as of the end of June to 4.14% as of December 31, 2002 while
its market share of current accounts and savings accounts increased from 3.37%
and 4.69%, as of June 30, 2002, respectively to 4.32% and 5.02%, as of December
31, 2002, respectively.

As a direct consequence of the implementation of the "corralito", there was a
mass opening of new accounts, mainly savings accounts, which increase was
concentrated during the first months of 2002, accompanied by a substantial
increase in the amount of transactions conducted. The number of accounts
decreased later during the fiscal year as, in accordance with Argentine Central
Bank's provisions, all current accounts and savings accounts denominated in
dollars were closed, leading to a significant drop in the account portfolio. In
addition, due to the general economic situation, savings accounts and current
accounts closed by customers was also significant.

Within a restrictive environment for cash transactions, transfers between banks
through clearing houses and financial checks gained importance. These services,
in a first stage, were offered to customers free of charge. Later, after certain
changes in the regulatory framework that authorized financial institutions to
charge for them, the Bank implemented a commission adjustment program that led
to an increase in the profitability per account.

With respect to lending, during most of the year, the financial systems operated
within an environment which main feature was the suspension of origination and
the repayment and pre-payment of credit. Within this context, the Bank
maintained its lines of credit for debt refinancing and re-adjustment in order
to allow those customers facing payment problems as a consequence of the crisis
to consolidate their financial condition. The consumer-loan portfolio dropped to
Ps.893 million as of December 31, 2002, due to the lack of new transactions, the
repayment and the high level of advanced repayments. In addition, the portfolio
was also reduced by the securitization or sale of loans carried out within the
framework of the Plan. See "--Galicia Capitalization and Liquidity Plan."

The credit card business (nationally accepted credit cards issued by the Bank)
suffered a strong contraction during 2002, both with respect to purchase volume
and number of card holders, reaching, during some months of the year, activity
levels equivalent to 60% of the levels reached the previous year. In the second
half of the year, the resumption of installment purchases -within a more stable
environment- and an active market regarding promotions allowed for the reversal
of the trend and for the recovery of the business. Notwithstanding this decline,
which was to a great extent reverted by the end of the year, the Bank
consolidated its leadership within the Visa system. Thus, the Bank increased its
advantage over its immediate competitor due to the different initiatives put in
place, aimed at the retention of customers and to encourage credit-card activity
through incentives. As of December 31, 2002, the Bank's market share in the Visa
system amounted to 15.1% as measured by credit-card use and to 11% as measured

                                      -39-

<PAGE>

by number of cards and, in the case of American Express, the Bank's share in
cards issued by financial institutions was 34% as of December 31, 2002.

The restrictions imposed on cash availability, together with the 5% VAT refund
for debit card purchases established by the Government, made this product grow
significantly with respect to the previous year. In fact, the fiscal year
recorded a 2,000% increase in purchases made through debit cards, which increase
was also supported by vendor promotion campaigns.

In response to the changes in the economy, the Bank actively took part in the
consumer segment of the foreign exchange market. As of the end of the year, the
Bank conducted transactions through its branches for approximately US$97 million
per month, excluding foreign trade transactions, thus generating a monthly
income of more than Ps.3 million. This income partially offset the decline in
the income from other services that were affected by a low level of economic
activity and by the shrinkage shown by the market.

Galicia Ahora ("GA") was the Bank's distribution network located in the
Argentine post office branches that specialized in the provision of financial
services to low income segment and potential customers that mainly are not users
of bank services. GA service centers were small but fully operational, highly
mobile and equipped with highly automated facilities with a low operational
cost. This, together with their location in the post office premises made the GA
network an ideal channel for reaching and servicing the low-income segment. In
March 2001 GA reached break even point. In December 2001, there were 118 GA
service centers installed in branches of the Argentine postal service, with more
than 176,000 customers. As of December 31, 2002, as a part of the Bank's
downsizing contemplated in the Plan, the GA network was absorbed by the Bank's
branch network.

Regional Credit Card Companies - In January 15, 2002, the Tarjetas Regionales
S.A. Shareholders' Special Meeting resolved to increase that company's capital
stock up to the amount of Ps.226.7 million. This was achieved through the
issuance of 70,734,148 common and registered shares of par value of Ps.1 each,
with one voting right per share. The said shares were subscribed and wholly paid
up by Banco Galicia through the capitalization of debt. As a result of this
increase, Banco Galicia's equity interest and voting rights in this company is
68.22%, while Banco de Galicia (Cayman Islands) Ltd. holds the remaining 31.78%.
As of December 31, 2002, Banco Galicia held majority interests through Tarjetas
Regionales S.A. in 4 regional credit card and consumer finance companies
operating in different provinces of Argentina:

-    80.0% in Tarjeta Naranja S.A., a company operating in central Argentina,
     mostly in the provinces of Cordoba and Santa Fe;

-    60.0% in Tarjetas Cuyanas S.A., a company operating in the Province of
     Mendoza;

-    60.0% in Tarjeta Comfiar S.A., a company operating in the Province of Santa
     Fe; and

-    99.99% in Tarjetas del Mar S.A., a company operating in the City of Mar del
     Plata and other areas of the Province of Buenos Aires.

Tarjeta Naranja S.A. acquired a 40% equity interest in Tarjeta Comfiar S.A. in
July 2000. As a result, as of December 31, 2002, Tarjetas Regionales S.A.
controlled, directly or indirectly, 92.0% of Tarjeta Comfiar S.A. Along with the
purchase of 40% of the shares of Tarjeta Comfiar S.A., Tarjeta Naranja S.A. took
over management of this company.

The Bank's policy is designed to unify management of operations and implement
the technology necessary to process transactions on a scale that allows
competitive prices, with the purpose of achieving economies of scale, increasing
market penetration, and improving profitability.

As of December 31, 2002, these companies had approximately 1.1 million regional
credit cards outstanding, with consumer financing totaling Ps.370.3 million.

The prevailing economic situation in Argentina and the economic policy measures
implemented in 2002 affected the consumer finance business aimed at the
lower-income segment of the population by means of the regional credit cards
companies.

                                      -40-

<PAGE>

Operations volume was affected from the fall in economic activity and in
salary's purchasing power. The fiscal year closed with a 10% decrease in the
number of active accounts and a 23% decline in the average annual purchase
volume in real terms (measured by the CPI). Furthermore, these companies'
customer credit portfolios decreased 65%, leading to a 45% reduction in their
operating income. Expenses decreased 55% during the fiscal year, mainly due to
the reductions carried out in staffing levels and the branch network. Since
these declines are expressed in real terms, they are magnified by the
restatement of the previous period amounts in currency of December 2002, by
means of the WPI variation. Even though payment delinquency increased strongly
during the first months of the year, it diminished as of the end of the fiscal
year. Activity levels began to pick up in the last quarter of the year and
together with the cost reduction implemented, results of operations began to
improve by year-end.

In addition, during 2002, these companies' financial condition suffered from the
peso devaluation and inflation. The devaluation substantially increased the
value of liabilities denominated in foreign currency, a variation that could not
be offset by a revaluation of assets also denominated in foreign currency, due
to the fact that such assets were pesified at the exchange rate of Ps.1 per US
dollar, in accordance with the regulations set forth by the Government.
Inflation affected accounting results as monetary assets had a yield lower than
the price index variation during the period.

Furthermore, the lack of liquidity that affected the Argentine economy since
mid-2001 strongly restricticted corporate access to credit during the fiscal
year. Due to the difficulties encountered to obtain financing, both in the
domestic and foreign markets, the regional credit card companies were forced to
suspend the mid- and long-term lines of loans that they offered to their
customers, thus focusing only on short-term lines.

Mainly due to the above-mentioned reasons, in 2002 the loss recorded by the
group of operating regional credit-card companies indirectly controlled by the
Bank amounted to Ps.405.9 million, of which Ps.333.4 million corresponded to the
Bank. This amount includes Ps.260 million of monetary loss due to inflation.
Some of these companies are operating with a negative shareholders' equity,
which was allowed by Decree No.1269/02 in view of the pervasive crisis situation
in Argentina. On a consolidated basis Tarjetas Regionales S.A.'s shareholders'
equity was negative in the amount of Ps.60.7 million.

Insurance - In 1996, Banco Galicia established a joint venture with Hartford
Life International, creating Galicia Vida Compania de Seguros S.A. to sell life
insurance and annuities. The Bank's interest in Galicia Vida was 12.5%. Toward
the end of 1996, Galicia Vida began to market products specifically designed for
distribution through the Banco Galicia network. In December 2000, the Bank sold
its interest in Galicia Vida Compania de Seguros S.A. and purchased the 12.5% of
Sudamericana Holding S.A., a life and retirement insurance holding company. The
other shareholders of Sudamericana Holding S.A. were Hartford Life International
Corp. (US) and Hartford Life Limited (Bermuda) with a 50% stake and Grupo
Galicia with the remaining 37.5%. In September 2001, Grupo Galicia acquired
Hartford Life International Corp. (US) and Hartford Life Limited (Bermuda)
stakes, reaching a participation of 87.5%, while Banco Galicia holds the
remaining 12.5%. See "--Initiatives and Investments."

The Bank markets Sudamericana's life and life-related insurance products through
its own distribution network. Sudamericana's subsidiaries also sell their
products through its own distribution capabilities. The Bank also sells through
its distribution network property and casualty insurance from other companies.

As of December 31, 2002, the Bank serviced approximately 229,000 insurance
policies.

Traditional distribution channels - Due to its extensive and broad geographic
distribution, the branch network is one of the Bank's most important competitive
advantages. This is reinforced by a unified management system through the use of
the Bank's Intranet, modern systems and communication technology and a service
model that is continuously being improved.

                                      -41-

<PAGE>

As of December 31, 2002, the Bank's branch network in Argentina totaled 227
branches and was organized as follows:

<TABLE>
<CAPTION>
BRANCHES                          DECEMBER 2002          DECEMBER 2001
----------------------------------------------------------------------
<S>                               <C>                    <C>
Traditional Branches                  219                    269

In-Store Branches                       8                     19
----------------------------------------------------------------------
BRANCHES IN ARGENTINA                 227                    288
</TABLE>

Automated Banking - Alternative electronic contact channels (other than
traditional channels) for both individual and corporate customers that allow
self-service options consist basically of the Customer Contact Center ("CCC"),
the Bank's network of automated teller machines and self-service terminals ("Red
Galicia 24") and "e-galicia.com" (the Bank's Internet banking service). As of
the end of 2002 the automation rate was 62%. This ratio represents the number of
transactions through alternative channels (automated teller machines, Fonobanco,
Investment Center, Internet banking, self-service and automatic debit terminals)
as a percentage of the total number of transactions initiated by customers, both
in alternative and traditional channels (branches).

Customer Contact Center. The Customer Contact Center is comprised of the
following services: Fonobanco; Fonobanco Seguros; Foreign Trade; Galicia
Responde; Telemarketing; the Investment Center; the Collections Center;
e-galicia.com and the switchboard. The Customer Contact Center has 260 staff
positions and handled approximately 15 million incoming and outgoing calls
during fiscal year 2002, showing a significant increase as compared with the
level recorded during the previous year.

Fonobanco, the Bank's telephone-banking service, handled 12.3 million calls. At
present, 85% of all calls are handled through Interactive Voice Response ("IVR")
units, which resulted in significant cost savings. The Foreign Trade telephone
service sector received more than 110,000 calls during the fiscal year, all of
them answered by specialized staff. Fonobanco Seguros' service totaled an annual
volume of 73,000 calls related to property insurance, meeting all customers'
after-sales needs. Galicia Responde was created to offer all customers an
opportunity to present their concerns, dissatisfaction, or complaints, and have
such issues resolved within defined standard time frames.

The Telemarketing Center manages a complete platform of retail products for sale
and provides advice regarding the Bank's products and services both to customers
and non-customers, through a nationwide toll-free telephone number. More than
300,000 calls were answered through this phone number during the fiscal year. In
line with its main activities, Telemarketing was in charge, together with the
branch network, of the Bank's customer recovery and loyalty campaigns.

The Collection Center provides support for collection of past-due loans by
following up with customers who owe payments. Throughout 2002, the Collection
Center played an essential role aimed at stabilizing the Bank's past due loan
portfolio, receiving more than 1,250,000 accounts for collection, representing a
21% increase in comparison with 2001.

Red Galicia 24. In order to develop automated banking and avoid bank
disintermediation in the provision of information and electronic transfer of
funds services, in 1985 Banco Galicia established, together with 4 other private
banks, a nationwide automated teller system, Banelco S.A. Banco Galicia holds a
20.0% equity interest in Banelco S.A. Banks affiliated to Banelco provide their
electronic banking service through Banelco ATMs and issue Banelco cards. Banelco
is currently the largest ATM services network in Argentina, with more than 3,100
ATMs and 7 million debit cards. Banelco also features a real time connection to
the other national and international networks.

Through Banelco ATMs, customers may carry out most transactions related to
deposit accounts or credit cards, including inquiries, cash withdrawals, payment
of credit card statements and utility and other bills, transfers, and deposits.
Customers can also buy mutual funds and insurance products as well.

There are more than 865,000 "Galicia 24" Banelco debit cards outstanding.

                                      -42-

<PAGE>

Red Galicia 24 is made up of 1,150 state-of-the-art technology terminals
throughout the country, whether in traditional branches or neutral positions,
Shell's gas stations and supermarkets, in line with the strategy to be close to
our customers and provide them with the means to solve their transactional
requirements in a dynamic, simple and safe way.

NETWORK OF AUTOMATED BANKING TERMINALS

<TABLE>
<CAPTION>
                                  DECEMBER 2002          DECEMBER 2001
----------------------------------------------------------------------
<S>                               <C>                    <C>
Automated Teller Machines             600                     667

Self-Service Terminals                550                     607
----------------------------------------------------------------------
</TABLE>

e-galicia.com. In March 2000, the Bank launched its Internet portal,
e-galicia.com, which offers a flexible channel for transactions, as well as a
complete-range of innovative services, products, and content that stimulates the
development of e-commerce.

Through the individuals' transaction channel at e-galicia.com, "Home Banking
Galicia," Banco Galicia's individual customers can make inquiries, requests and
conduct all kind of transactions from any computer with access to the Internet.
Among the range of inquiries that can be made, customers can see their balances
and activity in savings accounts and current accounts, maturity dates of time
deposits, due dates of loan installments and credit card summaries, among
others. Moreover, they can pay for their purchases with credit cards, subscribe
to the automatic debit service, invest in time deposits and mutual funds, buy
and sell government securities, transfer funds between their accounts and those
of third parties within or outside the bank, pay most of their taxes and
accounts (through the direct connection from Home Banking Galicia to the web
site "Pagomiscuentas.com") and to quote and hire a home or automobile insurance.
Customers are also able to subscribe to a message service and receive
information about their products (account statement, balances, maturities) by
electronic mail or telephone voice mail. Near the end of 2002, the prepaid
service to access DECIDIR.COM's commercial reports was incorporated, thereby
allowing the Bank's customers to inquire on the commercial condition of their
customers or suppliers.

In step with the explosion in Internet use worldwide, e-galicia.com has shown
exponential growth since it was launched. Currently, the web site receives
almost 1,000,000 visits monthly and, through Home Banking, 1,500,000 inquiries
and transactions are carried out monthly. These numbers represent a 30% growth
compared to the end of 2001.

e-galicia.com also features an exclusive section for corporations: Galicia
Office. See "--Wholesale Banking--Galicia Office."

Private Banking - The purpose of this business unit is to provide
private-banking and advisory services to medium- and high-net-worth individuals,
as well as to manage collective investment portfolios. During the year, this
unit mainly focused its effort on customer service and advice with the purpose
of maintaining close relations with them, as the only path to successful
activity in the long term.

This unit implemented during the period a cost reduction plan, which included
the merger of Galicia Private Banking with Galicia Prefer Banking, the
relocation of customer centers and the reallocation of the sales structure
influence areas. Additionally, staff was reduced by 30% through voluntary
retirement plans.

Wholesale Banking

The Wholesale Banking Group encompasses the areas that provide commercial and
investment banking services, as well as capital-market and international
services. These services are provided to corporations, financial institutions,
mutual funds, and retirement and pension funds (AFJPs), among others, both in
Argentina and abroad. Moreover, the Wholesale Banking Division is responsible
for managing the Bank's commercial portfolio credit risk.

                                      -43-

<PAGE>

         Corporate Banking

The Corporate Banking Division provides commercial banking to all sectors of the
economy and is organized by type of customer.

The end of the Convertibility Law, the "asymmetric pesification" and the breach
of contracts that it implied led to an extremely unfavorable environment for the
financial business and to a highly unstable context. Therefore, activities
carried out by the Corporate Banking Division during the year were affected by
the confidence crisis in both the financial system and the Bank, the significant
decrease in deposits - that mainly took place in the first half of the year -
and the significant deterioration of the quality of the loan portfolio. The
deterioration was a consequence of the economic crisis, the four-year recession
that was being experienced by Argentina and the private-sector debt
restructuring measures implemented by the Government.

In order to face this situation, the Corporate Banking Division updated its
internal structure by separating the areas devoted to business management - that
were grouped under the scope of the new Commercial Department - from the ones
responsible for restructuring corporate debts of those companies with feasible
businesses but repayment problems. Departments responsible for the
administration and collection of corporate loans, which during the previous
fiscal year were part of the former Credit Division began to report to Corporate
Banking.

Within the Commercial Department, the sector specialized in the agricultural and
livestock segment was maintained. In this segment, the Bank continued
consolidating its position with the best quality portfolio in the market. The
Bank's knowledge of this economic sector, as well as of its members, developed
during many years of servicing this segment, was the basis for this, apart from
the extensive coverage of the most important production areas provided by the
Bank's branch network.

During 2002, the Commercial Department's activity also focused on the provision
of an integral service to small- and medium-sized companies ("PYMEs"), with the
purpose of meeting not only their credit needs, but also with a strong support
in respect to non-financial services, foreign trade services and electronic
banking.

As in previous periods, the offer of non-financial services maintained an upward
trend. Within the strategy of providing integral solutions for our customers'
treasury management, and with the purpose of positioning the Bank as the main
market player in this area, transactional accounts in "quasi-monies" were
developed and modifications were introduced to the design of collection and
payment services. Additionally, a new version of the direct deposit of salaries
module was developed through Galicia Office and improvements are being made in
this channel's payment to suppliers and collections systems, with the purpose of
migrating customers to this channel and attaining service improvements that will
lead to an optimization of operational circuits.

Credit activity resumed as of the second half of 2002, together with the
recovery of deposits, but remained limited. This activity was limited to
traditional short-term financial assistance mostly through operations related
with checks, advances and factoring.

As of the end of the year, the loan portfolio to large corporations amounted to
Ps.2,112.4 million, while the total loan portfolio to the PYME and the
agriculture-and-livestock sector amounted to Ps.882.4 million.

         Galicia Office

Galicia Office is e-galicia.com's exclusive section for corporations.

In 2002, application improvements continued to be developed. One of such
improvements was the implementation of the foreign-trade module, which allows
users to follow up their current transactions at the Bank, as well as obtain
historical activity information. Customers are able to see the details of the
transaction, the image of the settlements thereof and the SWIFT message. They
also have access to a page with links to useful information that is constantly
updated. Other important developments implemented were the new version of the
direct deposit of salaries module and the online renewal of operators' digital
certificates. The direct deposit of salaries module allows customers to see the
status of the salary crediting and all the information related to each step of
the process (crediting date,

                                      -44-

<PAGE>

amount, account to be debited, who signed the transaction and whether any
authorization is missing, information on beneficiaries, comments, etc.). The
online renewal of operators' digital certificates makes the processing of new
certificates easier for operators, as they use their current digital signature,
with no need to request such signature again by hand.

Through Galicia Office, companies may review the statements of all their bank
products (such as accounts, loans, investments, and receivables from Visa and
Galicia Rural transactions). They may also access a range of information about
their entire portfolio of checks and checks returned, request and confirm
checkbooks, make transfers between their accounts and to those of third parties
within or outside the Bank, make investments, inquire about their foreign trade
transactions, have access to useful information, pay their employees' salaries
safely, renew their digital signature online and pay their suppliers.

Galicia Office underwent a strong expansion during 2002. Transactions through
this channel reached Ps.73 million in December 2002. The number of customers
subscribed increased to 12,000, representing an annual increase of 1,000
companies conducting transactions through Galicia Office.

         Investment Banking

Investment banking services include advisory and structured finance services for
corporations, institutions, and governments, both national and provincial and
are provided by the Bank through its Investment Banking Division that oversees
the activity of the Bank's subsidiary, Galicia Capital Markets S.A.("GCM"). In
addition, GCM manages the Bank's own industrial investments and private equity
funds. GCM is a 99.99% owned subsidiary of Banco Galicia.

With regard to services to corporations, institutions, and governments, the Bank
originates, structures, and implements project financing and structured
financing. It also handles equity and debt issues and provides advisory services
for mergers and acquisitions.

Within an adverse macroeconomic environment, as in 2002, GCM activities were
affected by the complete close of the local and international capital markets to
Argentina, which restricted access to credit both for the public and private
sectors. Despite the negative conditions under which GCM had to operate, it
closed 21 transactions with 17 customers.

Regarding the advice provided to the Bank on its funding strategy, GCM worked
under the guidelines of the Plan to restore the Bank's liquidity after the
Argentine Central Bank's approval of the Plan, as well as to attain an orderly
restructuring of its liabilities. In addition, GCM had an active role in the
exchange offer related to the New York Branch restructuring and is currently
advising the Bank on its foreign debt restructuring.

GCM manages the portfolio of industrial investments acquired by the Bank as a
result of its participation in the privatizations that took place during the
1990s.

         Treasury Division

During fiscal year 2002, the Treasury Division began to report to the Wholesale
Banking Group.

The Treasury Division is responsible for the management of the Bank's treasury
operations and its proprietary liquidity, foreign exchange and securities
positions and participates in the management of market, liquidity, interest-rate
and currency risks. To this end, it develops the necessary data and strategies
to keep such risks within the limits established by the Board of Directors.
Similarly, it is responsible for the administration of third parties' assets,
mainly the portfolios regarding the FIMA mutual funds. The Division provides
services, among others, to corporations, financial institutions, mutual funds,
pension/retirement funds and insurance companies. Intermediation services in the
different markets are carried out by the Bank, sometimes in its capacity as
agent of the Mercado Abierto Electronico (the Argentine OTC Market) and through
Galicia Valores S.A., a brokerage firm that operates on the Buenos Aires Stock
Exchange.

                                      -45-

<PAGE>

Banco Galicia offers brokerage services through its branch network. All equity
brokerage activities are conducted by Galicia Valores S.A., a 99.99% owned
subsidiary of Banco Galicia. Galicia Valores provides equity securities trading
and custodial services to Banco Galicia customers. Galicia Valores is a
shareholder of the Buenos Aires Stock Market, affiliated with the BASE, and
therefore effects transactions as either principal or agent on such exchange.
Galicia Valores does not make investment decisions for its customers.

Financial Operations - Domestic capital market's activity for 2002 was
characterized by an important decrease in trading volume, while the Bank's
activity dropped in relative terms due to the limits and restrictions imposed by
the regulatory authority.

In an environment of strong political and economic instability, trading volumes
in local markets declined significantly. The volume of government securities
traded between January and November 2002 in the Mercado Abierto Electronico
(MAE) reached an estimated US$5,132 million, according to the last figures
available, compared with US$144,226 million traded between January and November
2001. The Bank's share of the total trading volume was 0.09%, lower than the
5.19% for the same period of fiscal year 2001. Similarly, for the stock market,
the total trading volume was US$14,174 million, to which Galicia Valores S.A.
contributed a total of US$65 million, representing a 0.23% market share.

Asset Management - This business unit is dedicated to managing mutual fund
investment portfolios. Banco Galicia provides the "FIMA" family of mutual funds,
for which it acts as distributor and custodian and for which Galicia
Administradora de Fondos S.A. Sociedad Gerente ("GAF") is the managing corporate
entity. Banco Galicia owns indirectly 99.99% of GAF.

Due to the many changes in rules and regulations provided for during 2001 and
2002, the activity of the mutual fund industry was affected with respect to
product structure and fund availability.

At the end of 2001 the National Securities Commission (Comision Nacional de
Valores or the "CNV") authorized mutual funds administrators to provide for the
necessary means that would allow them to pay the redemptions with cash and/or in
kind, thereby keeping the proportional share of the assets in the mutual funds
portfolio and preserving the interest of all mutual fund holders. Subsequently,
different regulations issued by the Argentine government and regulated by the
Argentine Central Bank established the pesification and the restructuring of
bank deposits.

GAF in its capacity as administrator and the Bank in its capacity as depositary
decided, pursuant to the regulations issued by the CNV, to divide the funds
managed based on the liquidity of each of the portfolios, thus dividing the
funds in "shares". As a result, at fiscal year end the 11 funds managed totaled
18 "shares".

FIMA funds under management decreased from Ps.190 million at the close of fiscal
year 2001 to Ps.108 million as of December 31, 2002. Of this amount, Ps.44
million correspond to operational funds (funds that can undergo subscription and
redemption transactions) and Ps.64 million correspond to funds the "shares" of
which have been restructured or invested in Argentine Treasury Bills due and
unpaid.

GAF is currently assessing the possibility of reorganizing the FIMA family of
funds pursuant to a resolution by the Argentine Central Bank that makes it
possible to settle funds as long as there is an authorization from such
regulatory authority. Its application to the FIMA funds shall make it possible
to reorganize the existing funds, merging those that have similar assets and
concentrating them in a continuating fund, with the purpose of achieving a more
efficient administration, reducing operating costs, and simplifying the product
offer.

European Distribution - Galicia y Buenos Aires Securities (UK) Ltd., a
wholly-owned subsidiary of the Bank was established with the purpose of
distributing equity and fixed income securities of Argentine and Latin American
governments and corporations in the United Kingdom and in the main European
markets. The Bank's research department supported these activities. As a result
of the impact of the economic environment in Argentina on the Bank and on
Galicia y Buenos Aires Securities (UK) Ltd., this subsidiary has complied with
the requirements of the Financial Services Authority ("SFA") of the United
Kingdom to wind down its activities. The company was dissolved in the fourth
quarter of 2002.

                                      -46-

<PAGE>

         International

The International Division provides services involving international financing,
credit and services related to foreign trade and factoring activities. In
addition, the division manages the Bank's foreign network and fund-raising from
international commercial banks. This division also manages relations with
correspondent banks and international credit agencies.

Accordingly, in 2002 this Division's activities mainly concentrated on its
participation in the implementation of the Plan, especially relating to the
Bank's foreign debt restructuring process, which started with the restructuring
of the New York Branch's debt, and the winding down of the Bank's operating
units abroad.

The Bank's New York Branch was licensed as a full service branch and started
operations on December 1, 1994. The New York Branch concentrated in providing
international financial services to the Bank's customers, mainly Argentine
corporations and individuals. Given the liquidity problems that the Branch began
to face in late 2001 as a result of the events that were occurring in Argentina,
on March 11, 2002, Banco Galicia and its New York Branch reached an agreement
with the Office of the Comptroller of the Currency (the "OCC"), the regulating
body that reports to the U.S. Federal Government's Treasury Department, to wind
down the New York Branch in an orderly manner and subject to the guidelines
imposed by the OCC. This was achieved during 2002. The restructuring of the New
York Branch's liabilities, which amounted to approximately US$331 million as of
March 31, 2002, was completed during the fiscal year and the Branch was closed
January 30, 2003. The New York Branch's debt restructuring is explained in more
detail in the "Galicia Capitalization and Liquidity Plan" section.

Banco Galicia opened a full branch in the Cayman Islands in May 1997 as another
alternative deposit location for the Bank's customers. The restructuring of the
foreign debt of the Bank's Head Office in Argentina and of its Cayman Branch's
foreign debt is currently in progress within the framework of the Plan.

Galicia Uruguay started operating as a domestic financial institution in Uruguay
on November 1, 1999, under the new name "Banco Galicia Uruguay S.A." In this
capacity, Galicia Uruguay was allowed to perform all permitted financial
activities in Uruguay, with residents and non-residents. As of December 31,
2001, Galicia Uruguay had representative offices in Buenos Aires and New York
and branch offices in 5 Uruguayan cities. As of December 31, 2001, Galicia
Uruguay had consolidated assets of US$2,181 million, and was Uruguay's largest
private financial institution in terms of shareholders' equity, which reached
US$231 million as of December 31, 2001.

The events that took place in Argentina, particularly the implementation of the
"corralito" in December 2001, deteriorated the public's confidence in Argentine
banks and had a negative impact on Galicia Uruguay's depositors, thus generating
a massive bank run on its deposits as of mid-December, which was faced with said
subsidiary's liquidity. Galicia Uruguay's activities were suspended on February
13, 2002. From that moment on, the process to restructure its deposits, which
was completed during the fiscal year, began, based on a proposal to repay 100%
of deposits, in dollars, in a 9-year time frame. In January 2003, Galicia
Uruguay started to pay the first installment provided for in the agreement
reached with depositors. The process is explained in more detail in the "Galicia
Capitalization and Liquidity Plan" section.

As of December 31, 2002, Galicia Uruguay had consolidated assets of US$801.1
million, of which US$398 were loans and US$399.5 million were deposits held
mostly at Banco Galicia's Cayman Branch, and a negative shareholders' equity of
US$268.4 million. As mentioned in the "Galicia Capitalization and Liquidity
Plan" section, the Bank has requested authorization from the Argentine Central
Bank to transfer to Galicia Uruguay dollar-denominated Boden 2012 for an amount
equivalent to the net effect of the compensation determined for Galicia Uruguay
(that is deducting from the compensation amount the amount of the loan to be
granted to the Head Office in Argentina, by the Argentine Central Bank, to
purchase the hedge bond). See "Item 5. Operating and Financial Review and
Prospects--Description of Consolidated Assets and --Description of Consolidated
Liabilities." This amount was estimated at US$438 million.

At the date hereof, Galicia Uruguay is seeking irrevocable indications of
interest for an exchange offer from all its depositors holding deposits
reprogrammed in 2002. The solicitation period commenced on June 17, 2003 and
ends on July 15, 2003, and may be extended at Galicia Uruguay's sole and
reasonable discretion. Galicia is offering

                                      -47-

<PAGE>

various options in exchange for the reprogrammed deposits, subject to various
maximum limits which options would be pro-rated if oversubscribed.

The options are US$1,000 of such reprogrammed deposit for: (i) US$1,000 of Boden
2012 at face value, plus a premium, payable in cash of 3%. This option is
limited to a maximum amount of $US$375 million; (ii) US$1,000 of a new
negotiable obligation to be issued by Galicia Uruguay, with an interest of Libor
plus 300 basis points, payable semi-annually, up to a maximum interest rate of
7%, with three scheduled amortizations on December 15, 2009 (30%), December 15,
2010 (30%) and December 15, 2011 (40%), together with a cash payment of interest
of US$13.75 payable on September, 2003. This negotiable obligation may be
redeemed by Galicia Uruguay beginning December 15, 2008. This option is limited
to a maximum amount of $US$300 million; (iii) US$450 of a new negotiable
obligation issued by Galicia Uruguay, with an annual interest rate of 2%,
payable semi-annually, with a bullet amortization on December 15, 2005, together
with a cash payment of principal and interest of US$88.75 on September 2003, and
US$425 of Boden 2012 at face value. This option is limited to a maximum amount
of $US$110 million; or (iv) US$500 of a new negotiable obligation issued by
Galicia Uruguay, with an annual interest rate of 2%, payable semi-annually, with
three scheduled amortizations on December 15, 2006, (30%), December 17, 2007
(30%) and December 15, 2008 (40%), together with a cash payment of principal and
interest of US$88.75 on September, 2003, and US$425 of Boden 2012 at face value.
This option is limited to a maximum amount of US$200 million.

In 1988, Banco Galicia established Banco de Galicia (Cayman) Ltd. as another
alternative deposit location for the Bank's customers. As of December 31, 2002,
Banco Galicia owned 34.7% and Galicia Uruguay owned 65.3% of Banco de Galicia
(Cayman) Ltd.'s capital stock. Galicia Uruguay's situation also affected its
subsidiary Banco de Galicia (Cayman) Ltd. The latter required the Cayman Island
authorities to appoint a provisional liquidator in order to reach a voluntary
restructuring agreement between the company and its creditors, which is
currently in progress. See "--Galicia Capitalization and Liquidity Plan."

Regarding foreign-trade activities, Argentine foreign trade was profoundly
affected by the economic crisis and the measures taken to solve it, especially
the changes introduced to the foreign exchange regime and regulations.

The Bank was not excluded from said situation, which was reflected in a decrease
in the volume of foreign exchange transactions channeled through it, which
amounted to US$1,046 million, representing 3% of the Argentine foreign trade for
the same period. This participation was 22.3% lower than the one achieved in
2001. As a consequence, the International Division redirected its focus to
providing customers with assistance in understanding regulations and to
contributing to overcome the restrictions resulting from the changes
implemented, trying to collaborate with customers and with their business
development. Among other measures, a foreign-trade guide was created, which was
a useful tool for customers, and new computer tools were developed to allow
customers to interact and conduct transactions with the Bank from their offices.

Until mid 2002, through Galicia Factoring y Leasing S.A. ("Galicia Factoring"),
Banco Galicia provided leasing and domestic and international factoring services
to small and medium-sized businesses. Banco Galicia owns 99.98% of Galicia
Factoring. Galicia Factoring is a member of Factors Chain International, an
organization based in Amsterdam that has more than 120 members in 44 countries,
and has installed one of the world's most advanced electronic data interchange
systems. Banco Galicia finances the factoring provided by Galicia Factoring y
Leasing S.A., while Galicia Factoring y Leasing S.A. administers the
transactions.

In mid 2002, the administration of domestic factoring and leasing transactions
were transferred to the Bank in order to make the cost structure more efficient
and to achieve economies of scale in an uncertain and unfavorable economic
environment. Within Galicia Factoring, the international factoring offer was
maintained, which had to be adjusted to the more restrictive and controlled new
foreign exchange regulations.

Internet

The Bank carries out its Internet businesses primarily through Net Investment
S.A. Banco Galicia's stake in the company is 12.5%, while the remaining 87.5% is
held by Grupo Galicia. See "--Initiatives and Investments."

                                      -48-

<PAGE>

COMPETITION

In general, the competitive environment in Argentina is still not a stable one,
given that the effects of the devaluation together with the rest of the measures
adopted by the Government in 2002, have deeply shaken the country's economic
system and most players in the different markets are still adapting to the new
environment. Changes in regulations are expected and in certain industries new
entire regulatory frameworks are still expected (financial system, utilities,
toll roads, etc). The Government that took office in May 2003 has not yet
defined its long term economic policy and the country's sovereign debt has still
to be restructured. When these open issues are defined, the competitive
environment will become clearer.

Due to Grupo Galicia's financial holding structure, competition is found not
directly at the holding company level but at that of the operating subsidiaries.
Grupo Galicia faces fierce competition in most of the areas of activity it is
involved with.

INSURANCE

In Argentina, the insurance industry is relatively underdeveloped. This sector
only represents 2.6% of Argentina's GDP, while in other Latin-American
countries, such as Chile, it represents 4% of GDP and in industrialized
countries such as the U.S.A. it represents 9%.

The insurance industry, encouraged by the economic stability and by positive
foreign investment inflows, had undergone an important development during the
90's. However, this expansion process was interrupted in 2002 as a result of the
end of the convertibility system and of the major changes in macroeconomic
conditions. Total insurance production decreased, at constant values, almost 39%
with respect to the previous year, reaching, pursuant to the last official
estimations, Ps.9,376 million, in constant currency of November 2002.

The property insurance sector represents more than half of the total insurance
companies (117 of a total of 217) and in 2002 its volume of premiums was around
Ps.6,000 million, taking into account November values. The main segment of this
sector is the automotive insurance (46% of the total), followed by workers
compensation (17%), fire and homeowners insurances.

Even though property insurance could better adapt to the new inflationary
context, with the reduction in contractual terms and conditions and increases in
the insured sums, its profitability was affected due to the increase in loss
experience and, in particular, due to the high robbery rates.

The volume of premiums of the individuals' insurance sector was around Ps.3,000
million in 2002. The most important segments of this sector are life insurance
(63% of the total), pension-linked life annuities (26%) and retirement plans
(11%). This sector was the driving force for the insurance industry development
in the 90's, when the social security reform, the creation of compulsory savings
through the AFJPs and the creation of supplementary retirement mechanisms took
place.

The life insurance sector comprises 62 companies and is highly concentrated; the
ten leading companies have a market share of 50%. The sale of saving retirement
insurance suffered a dramatic reduction during the last year and insurance
companies are committed to search for products better adjusted to the new market
reality, redirected towards protection and health coverages.

Individual and group retirement insurances is falling and, from the 37 operating
companies in 1995, only 24 remain in operation. On the other hand, the
pension-linked annuities sector is increasing in comparison to previous years,
in constant currency, due to the favorable impact of devaluation on the
portfolios and to the automatic flow of new customers from the pension system.

                                      -49-

<PAGE>

OTHER ACTIVITIES

Galicia Warrants S.A. was established in April 1993 and currently has a 35%
market share of this business. Argentina's warrants market can be defined as
highly concentrated (three companies hold 85% to 90% of the total market) with
competition primarily focused on price, volume and business expertise.

The Internet portal "Soloduenos", which managed to become the most visited
real-estate site during the previous fiscal year, ceased to operate on January
1, 2003 due to the negative impact of the macroeconomic situation and the
measures implemented in 2002 on mortgage lending and the real-estate market.
This decision will be reviewed in the following months as long as the
development of the economy, and particularly the development of the real estate
sector, makes it advisable. The market conditions mentioned have also affected
our competitors in this market niche.

Throughout its subsidiary, Net Investment BV, Grupo Galicia also participates in
the businesses developed by Tradecom International NV's subsidiaries, located in
Argentina, Brazil and Uruguay; thus offering supporting business-to-business and
e-commerce services and virtual markets for the interaction of companies and
suppliers. Despite the difficult market conditions, Tradecom Argentina S.A.
accomplished an aggressive business development program, which allowed it to
broadly improve its position as an e-commerce solution provider. There are
numerous business projects still pending approval. Although, the Internet market
is usually described as a mobile and a highly competitive market, we believe
that our subsidiaries have been generating a valuable position, with tangible
results, that represent an excellent platform to continue competing.

Red de Campo has evolved from a purely e-business procurement oriented company
to a flexible company capable of integrating the whole productive process. It is
the first private network in this sector. As of December 31, 2002, such network
was made up of more than 500 agricultural and livestock producers and more than
30 suppliers of goods and services. Management considers that Red de Campo's
innovative structure provides the right instrument to be utilized in the
difficult eonomic context to maintain our leading position while strengthening
our relationship with the sector. Due to its particularities and considering
that the company is in a start-up stage, it is not possible to establish any
competition relationship between our company and any other company acting at the
same level.

There is no available data on the Argentine consumer finance market in which the
regional credit-card companies operate. The 2002 economic crisis described
elsewhere in this annual report significantly affected these companies'
competitors, with most of them having ceased operations. Therefore, in general,
competition to these companies is currently much lower than in the past.

BANKING

As of September 30, 2002, the Argentine financial system consisted of 102
financial institutions (including finance companies, credit unions, savings and
loan associations and investment banks), 64 of which were private-sector
financial institutions and 16 of which were Argentine government-owned or
related banks. As of September 30, 2002, out of the 64 private-sector banks:

(1) 31 were private-sector domestically-owned banks (i.e., sociedades anonimas);

(2) 31 were foreign-owned banks (i.e., local branches or subsidiaries of foreign
    banks); and

(3) 2 were cooperative banks (bancos cooperativos limitados).

The largest private-sector commercial banks, in terms of total deposits, were:
Banco Frances, Banco Rio de la Plata, Citibank, BankBoston and Banco Galicia.
Except for the Bank, these were all foreign-owned banks. According to
information published by the Argentine Central Bank as of September 30, 2002,
private-sector banks accounted for approximately 58.2% of deposits and
approximately 62% of loans in the Argentine financial system. Argentine
financial industry regulations do not raise any entry or exit barriers, nor do
they make any differentiation between locally or foreign-owned institutions.
Cooperative banks are active principally in consumer banking, with a special
emphasis on the lower end of the market. As of September 30, 2002, financial
entities (other than banks) accounted for approximately 0.4% of deposits and
1.1% of loans in the Argentine financial system.

                                      -50-

<PAGE>

The largest Argentine Government-owned or related banks, in terms of total
deposits, were Banco Nacion and Banco de la Provincia de Buenos Aires. Under the
provisions of Argentine Law No. 21,526, as amended (the "Financial Institutions'
Law"), public banks have comparable rights and obligations as private banks,
except that public banks handle public revenues and promote regional development
and certain public banks have preferential tax treatment. The by-laws of some
Argentine Government-owned banks provide that the governments that own them
(national and provincial) guarantee their commitments. Under current law, Banco
de la Provincia de Buenos Aires will not be subject to taxes, levies or
contributions that the Argentine government may impose. According to information
published by the Argentine Central Bank, as of September 30, 2002,
government-owned commercial banks and commercial banks in which the Argentine
Government had an ownership interest accounted for approximately 41.4% of
deposits and approximately 36.9% of loans in the Argentine financial system.

Consolidation has been a dominant theme in the banking sector since the
Convertibility Law was implemented in 1991, with the total number of financial
institutions declining from 214 in 1991 to 102 at September 30, 2002. In spite
of the large number of banks, the system is concentrated, with the ten largest
private banks holding 76% of the system's deposits as of September 30, 2002,
with significant differences in operating statistics (credit quality, efficiency
and profitability ratios) between the top-tier and bottom-tier banks.

During the decade of the 1990s, foreign banks increased their presence in the
Argentine financial system. Since the last quarter of 1996, control of many of
the largest Argentine private-sector domestically-owned commercial banks has
been transferred to foreign banks. As of December 31, 2001, foreign banks
controlled the largest private sector financial institutions except the Bank.
This foreign presence grew both in the universal bank sector and among financial
institutions specializing in specific products or markets. As of September 30,
2002, this situation had not substantially changed despite the fact that certain
foreign institutions with operations in Argentina have experienced problems in
2002 and the number of foreign banks decreased by 9 through September 2002 (the
last date for which official information is available). In this period, most
foreign banks operating in Argentina have experienced losses in their Argentine
operations and most of the parent companies have experienced significant losses
due to their investments in Argentina. It is unclear at the moment which foreign
institutions will remain in the country.

Banco Galicia faces significant competition in all of its principal areas of
operation. Until late 2001, foreign banks operating in Argentina, Argentine
national and provincial government-owned banks, private-sector domestic
commercial banks, and cooperative banks competed with Banco Galicia in
traditional commercial banking, investment banking, private banking, and the
provision of financial services such as credit cards, asset management,
securities brokerage and insurance products. With capital movements completely
free during most of the 90's and until November 30, 2001, Banco Galicia also
faced competition from foreign banks established abroad, mainly in corporate and
investment banking as well as private banking. Non-banking financial
institutions in Argentina also competed for customers' funds and in the
provision of certain banking services, such as consumer finance, credit cards
and insurance products.

As a result of the events that took place in December 2001 and during 2002, the
uncertainty governing economic policy, macroeconomic variables and the
regulatory framework for doing business in Argentina, in general, and financial
activities in particular, and the deep recession, financial activity was almost
paralyzed during the first part of the year. Deposit taking resumed in the
second half of 2002 but lending activities have not resumed, except for check
discounting and foreign trade financing, which are very limited. Investment
banking, private banking and asset management activities has also been extremely
limited, and have not resumed except for advisory services for corporate debt
restructuring. Credit card activity and consumer finance have also been
affected, mainly during the first half of 2002, having resumed in the second
half. In general, bank activity is currently concentrated mostly in the
management of means of payment, foreign trade services and foreign exchange
market intermediation. With respect to the activities currently being developed
by banks, the Bank faces the competition from foreign banks operating in
Argentina, Argentine national and provincial government-owned banks, private
sector domestic commercial banks, and cooperative banks, as well as from
non-banking financial institutions.

As a result of the crisis, the Bank's market share (considering the Bank's
deposits in Argentina only) decreased from 9.76% as of June 30, 2001 to 7.30% as
of December 31, 2001 and 5.26% as of December 31, 2002, when including the
Bank's restructured deposits swapped for government bonds in the Canje I as of
December 31, 2002. As of the same date, the Bank's market share in the financial
system's free deposits was to 4.38%. See "Item 5. Operating and Financial Review
and Prospects--Description of Consolidated Liabilities."

                                      -51-

<PAGE>

As of September 30, 2002, the latest date for which Argentine Central Bank data
on the whole financial system is available, and measured by its deposits in
Argentina only, the Bank was ranked 7th in the whole financial system and 5th
among private-sector banks (including foreign banks). As of December 31, 2001
the Bank's place in the system's deposit ranking was the same. Measured in the
same way, as of June 30, 2001 the Bank was ranked 3rd in the whole financial
system and 1st among private-sector banks (including foreign banks). Despite the
market-share loss due to the crisis, the Bank continues to be one of the leading
banks in Argentina and the largest domestically-owned.

The financial and economic measures adopted by the Argentine Government
commencing in January 2002 will likely result in a restructuring of the
financial system. Due to the severe crisis which affected Argentina and
specifically the banking system, the Argentine Central Bank has not provided
updated information for the entire financial system since September 30, 2002,
and, therefore, we cannot assure you that the information mentioned above has
not become outdated as of the date of this annual report.

SALES AND MARKETING

Banco Galicia operates one of the most extensive and diversified distribution
networks among private sector banks in Argentina. Banco Galicia's distribution
capabilities are Grupo Galicia's main marketing channel.

While continuing its long-term objective to consolidate its leadership in the
Argentine financial system, the Bank has significantly reduced its distribution
platform during 2002. The Bank's branch network in Argentina was reduced by 61
branches or 21.2% of the branches existing as of December 31, 2001. In addition,
the Bank's New York Branch was closed and its security house in London was
closed. Also Galicia Ahora, the Bank's service centers network specialized in
the lower-income segment of the population, which comprised as of December 31,
2001, 118 service centers was completely absorbed by the Bank's branch network
during 2002. The regional credit card companies in which the Bank holds a
controlling interest through Tarjetas Regionales S.A., have also reduced the
size of their distribution network during 2002. The number of these companies'
offices decreased by 16 or 15.5% of those existing as of December 31, 2001.

Despite the reductions described above, the Bank's distribution network
continues to be one of the largest and most flexible distribution platforms of
the country. In addition, despite such reduction, the Bank has kept its
nationwide coverage.

The Bank markets all of its financial products and services to high, medium and
medium-low income individuals, including insurance and FIMA mutual funds,
through the branch network. Within the branches, the sales force is specialized
by segment. The Bank sales policy encourages tellers to perform sales functions
too. Wealthy individuals, who are private banking customers, are serviced by
specialized officers through a special network of service centers and a head
office facility. The distribution channels for the lower-income segment of the
population is the network of offices of the regional credit card companies.
Until mid 2002, the Bank serviced this segment through the Galicia Ahora network
of service centers, which was absorbed by the branch network in 2002.

Commercial banking services to large corporations (including medium-large
companies) and banks are provided in a centralized manner. Branch officers are
responsible for the Bank's relationship with middle-market and small businesses
and most of the agriculture/livestock sector customers.

All of the Bank's individual and corporate customers have access to the Bank's
electronic distribution channels, including the ATM network, a multifunction
call center and an e-banking site. The Bank's call center performs telemarketing
and credit recovery functions.

Special mobile sales forces are maintained to market various products and
services to individuals and employees of client corporations. Until December
2001, certain products are marketed through channels other than the Bank's sales
force, for example mortgage loans were also marketed through real estate
brokers.

In the first half of the 1990s Banco Galicia experienced a period of high growth
due to the fast remonetization and bancarization process in the Argentine
economy and financial system. During this period the Bank invested heavily

                                      -52-

<PAGE>

in technology in order to develop the IT infrastructure and the non-traditional
distribution channels capable of supporting a very high growth rate in the
number of clients, transactions and products sold. With the same objective, from
the mid 1990's on, the Bank turned its focus to significantly increasing its
branch network and sales capacity. It increased the number of branches,
strengthened its sales culture, upgraded branches' lay outs and the IT platform
available to the different sales forces and back-offices to support sales, and
redefined the distribution of tasks among branches' staff. To provide service to
the lower-income segment of the population, it acquired and developed the
regional credit card companies' business and distribution capacity and
developped the Galicia Ahora distribution network in the premises of Correo
Argentino, the official postal service. In the late 1990s, at the same time, the
Bank developed a data warehouse, that currently enables it to perform
segmentation and profitability analyses, estimate performance patterns and
cross-selling indices, and forecast client response based on historical
information and datamining. In the late 1990s, the Bank turned its focus to a
more segmented marketing approach. The datawarehouse capabilities began to be
used to design marketing campaigns focused on specific segments of the Bank's
customer base. In addition, in the late 1990s, the Bank focused its marketing
strategy on the development of long term relationships with customers based on
the knowledge of such customers. As part of this client oriented strategy, the
Bank began to implement Customer Relationship Management ("CRM") technology to
support a continuous improvement of its relationship with customers.

The Bank continues with this strategy, despite the events occurred in Argentina
in 2001 and 2002.

PROPERTY

Grupo Galicia currently owns 150 square meters of office space at Tte. Gral.
Juan D. Peron 456, 2nd floor, 1038 Buenos Aires, Argentina, to house its
management, accounting, administrative and investor relations functions.

In addition, on April 11, 2002, Grupo Galicia purchased 8 functional units,
equivalent to 1,618.48 square meters, of a building located at Maipu 241 -
Autonomous City of Buenos Aires, premises of Galicia Retiro Cia. de Seguros S.A.
in the amount of Ps.1.8 million. Currently, our company leases 1 functional
unit, equivalent to 201 square meters, receiving Ps. 3,200 per month , holds two
functional units empty for leasing and the rest 5 functional units are being
occupied by the following subsidiaries: Sudamericana Holding S.A., B2Agro S.A.,
Galicia Vida Compania de Seguros S.A., Galicia Retiro Compania de Seguros S.A.,
and Aseguradora de Personas Galicia S.A.

BANCO GALICIA

Banco Galicia's principal executive offices consist of approximately 185,900
square feet at Tte. Gral. Juan D. Peron 407, Buenos Aires, Argentina. In
addition, Banco Galicia owns approximately 79,000 square feet at Florida 361,
Buenos Aires, Argentina, and rents space located at Tte. Gral. Juan D. Peron
525, Buenos Aires, Argentina, which is approximately 100,400 square feet, and at
San Martin 178/200, Buenos Aires, Argentina, which is approximately 39,100
square feet. All spaces serve as annexes to its principal executive offices.

In 1994, Banco Galicia purchased the building located at Reconquista 188/200,
Buenos Aires, Argentina and between 1992 and 2000 it purchased the building
located at Tte. Gral. Juan D. Peron 444, Buenos Aires, Argentina. In these
locations construction was begun of a new corporate tower building. The Bank
will centralize in this new building a significant portion of the offices that
are currently in the vicinity.

As of December 31, 2002, Banco Galicia's branch network consisted of 227
branches in Argentina, one branch in the Cayman Islands and one branch in New
York, 137 of which were owned and 90 of which were rented by Banco Galicia. The
Argentine branches were located in 22 of the 23 provinces in Argentina.

The head office of Galicia Uruguay is located at Luis Alberto Herrera 1248, 21st
and 22nd floors, Edificio World Trade Center, Montevideo, Uruguay, and consist
of approximately 9,500 square feet. Galicia Uruguay also rents a warehouse in
Montevideo, Uruguay where it stores documents. As of December 31, 2002, Galicia
Uruguay had four branches, including the head office, of which two were owned
and two were rented by Galicia Uruguay. Banco Galicia Cayman Ltd. and the Cayman
Islands branch are located in the Cayman Islands and The Bank of Nova Scotia
Trust Co. acts as its registered office.

                                      -53-

<PAGE>

As of December 31, 2002, Banco Galicia's New York branch rented approximately
5,000 square feet of office space at 300 Park Avenue, 20th Floor, New York under
a 10-year lease that expires on June 30, 2010. This branch was closed on January
30, 2003 and the lease was assigned to a third party.

The Sao Paulo, Brazil, and the London, UK, representative offices were closed
during 2002.

Tarjeta Naranja S.A. owns two buildings at Sucre 152 and Sucre 154, Cordoba,
Argentina, to house part of its management and administrative functions. They
consist of approximatively 15,000 square feet. The company rents office space at
Sucre 145/151 and La Rioja 375, Cordoba, Argentina, which, in aggregate are
approximately 39,500 square feet. These locations serve as annexes to its
principal executive offices. It also rents warehouse space at Humberto 1(degree)
2165 and at Avenida Colon 1562, Cordoba, Argentina, which, as a whole, consist
of approximately 12,000 square feet, and at La Rioja 364, Cordoba, Argentina,
which is approximately 3,800 square feet and serves as a printing center for
marketing material. As of December 31, 2002, Tarjeta Naranja S.A. operated 56
sales points, located in 15 of the 23 Argentine provinces. All of them were
rented by the company.

The head office of Tarjeta Comfiar S.A. is located at San Jeronimo 2350, Santa
Fe, Argentina. It consists of approximatively 7,100 square feet which are owned
by the company. As of December 31, 2002, its distribution network was made up of
13 sales points, located in the provinces of Santa Fe, Entre Rios, Misiones,
Corrientes and Chaco. The company owned one of them and rented the other 12.

Tarjetas Cuyanas S.A's principal executive offices are rented. They consist of
approximately 12,500 square feet at Belgrano 1415, Mendoza, Argentina. As of
December 31, 2002, its distribution network consisted of 10 sales points,
located in the provinces of Mendoza, San Juan and San Luis. All of them were
rented by the company.

Tarjetas del Mar S.A.'s 2,580 square feet principal executive offices are
located at Maipu 241, 2nd Floor, Buenos Aires, Argentina. As of December 31,
2002 its distribution network consisted of 8 sales points, located in the
Province of Buenos Aires. Both the head office and the branches were rented by
the company.

SELECTED STATISTICAL INFORMATION

You should read this information in conjunction with the other information
provided in this annual report, including the audited consolidated financial
statements of Grupo Galicia and Banco Galicia, and the "Item 5. Operating and
Financial Review and Prospects" section. We prepared this information from our
financial records, which are maintained under accounting methods established by
the Argentine Central Bank under Argentine Banking GAAP, and do not reflect
adjustments necessary to reflect the information in accordance with U.S. GAAP.
We have expressed all amounts in millions of pesos, except percentages, ratios,
multiples and per share data.

Unless otherwise stated, in this section the exchange rate used to convert
foreign currency amounts into pesos was the exchange rate as of each relevant
date or period end that Banco Nacion quoted. In the case of dollars, until
December 31, 2001, the Banco Nacion quotes for such exchange rates were Ps.1.0
per US$1.0. The exchange rate used for the preparation of the financial
statements as of December 31, 2002 was Ps.3.363 per US$1.0. See "Item 3. Key
Information--Exchange Rate Information," "Item 3. Key Information--Risk Factors"
and "--Main Regulatory Changes in 2002 and 2003."

The dollar-denominated assets and liabilities reflect balances held by Banco
Galicia, Galicia Uruguay, the New York and Cayman branches and the non-bank
affiliated companies required to be consolidated. Until the suspension of its
activities on February 13, 2002, Galicia Uruguay operated mainly in dollars.

Until December 31, 2001, Banco Galicia and the non-bank affiliated companies
required to be consolidated operated both in dollars and in pesos. This was a
consequence of the dual currency system of the Argentine economy. After that
date, transactions in the financial system denominated in dollars have been
significantly reduced and the dollar-denominated balances as of December 2002
are mainly non-pesified assets and liabilities remaining from operations under
the previous monetary system.

                                      -54-

<PAGE>

In 2002, Argentina experienced a high rate of inflation. The WPI increased
approximately 118.44% in 2002. Therefore, all information included in this
section has been restated to constant Argentine Pesos as of December 31, 2002
applying changes in the WPI for the period from January 1, 2002 to December 31,
2002. High rates of inflation affect the comparability of financial performance
on a period-to-period basis. Although inflation accounting improves the
comparability of the financial information, it does not eliminate or correct
many of the distortions created by inflation that will affect period-to-period
comparisons of our financial results.

AVERAGE BALANCE SHEET AND INCOME FROM INTEREST-EARNING ASSETS AND EXPENSES FROM
INTEREST-BEARING LIABILITIES

The average balances of interest-earning assets and interest-bearing
liabilities, including the related interest receivable and payable, are
calculated on a daily basis for Banco Galicia and Galicia Uruguay. The average
balances of interest-earning assets and interest bearing liabilities are
calculated on a monthly basis for Tarjetas Regionales S.A. and the regional
credit card companies in which it holds majority interests and for Grupo Galicia
and its non-banking subsidiaries.

Average balances have been separated between those denominated in pesos and
those denominated in dollars. The nominal interest rate is the amount of
interest earned or paid during the period divided by the related average
balance.

Net gains/losses on government securities and related differences in market
quotations are included in interest earned. Banco Galicia manages its trading
activities in government securities as an integral part of its business. Banco
Galicia does not distinguish between interest income and market gains or losses
on its government securities portfolio. The non-accrual loans balance is
included in the average loan balance calculation.

The average nominal interest rates for December 2002 were converted to real
rates using the following formula:

                1 + N(p)                             (1 + N(d)) (1 + D)
  R(p)  =     ------------   -  1      R(d)  =     ----------------------   -  1
                 1 + I                                  1 + I

Where:

        R(p)   =  real average rate for peso-denominated assets and liabilities
                  for the period;

        R(d)   =  real average rate for foreign currency-denominated assets and
                  liabilities for the period;

        N(p)   =  nominal average rate for peso-denominated assets and
                  liabilities for the period;

        N(d)   =  nominal average rate for foreign currency-denominated assets
                  and liabilities for the period;

        D      =  devaluation rate of the peso to the dollar for the period; and

        I      =  inflation rate in Argentina for the period (based on the
                  variation of CER).

The real interest rate can be negative for a portfolio of peso-denominated loans
when the inflation rate for the period is higher than the average nominal rate
of the loan portfolio for the same period. A similar effect could occur for a
portfolio of foreign currency-denominated loans when the inflation rate for the
period is higher than the sum of the devaluation rate for the period and the
corresponding average nominal rate of the portfolio.

The formula for the average real rate for foreign currency-denominated assets
and liabilities (Rd) reflects a gain or loss in purchasing power caused by the
difference between the devaluation rate of the Argentine peso and the inflation
rate in Argentina during the period.

The following example illustrates the calculation of the real interest rate for
a US dollar asset bearing a nominal annual interest rate of 10% (Nd = 0.10),
assuming a 5% annual devaluation rate (D = 0.05) and a 12% annual inflation rate
(I = 0.12):

              (1 + 0.10) (1 + 0.05)
R(d)  =     -------------------------     -  1  =  3.125% per year
                    1 + 0.12

                                      -55-

<PAGE>

In the example, since the inflation rate was higher than the devaluation rate,
the real rate is lower than the nominal rate in dollars. If, for example, the
annual devaluation rate were 15%, using the same numbers, the real rate in
Argentine pesos would be 12.9%, which is higher than the nominal rate in
dollars. Using the same numbers, if the annual inflation rate were greater than
15.5%, the real rate would be negative.

The following tables show Grupo Galicia's consolidated average balances,
interest earned or paid and nominal and real interest rates for interest-earning
assets and interest-bearing liabilities for the fiscal year ended December 31,
2002.

                                      -56-
<PAGE>

<TABLE>
<CAPTION>
                                          GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2002 (*)
                                  -----------------------------------------------------------------------
                                                               PESOS                             DOLLARS
                                  -----------------------------------------------------------------------
                                                  INTEREST    AVERAGE                INTEREST     AVERAGE
                                     AVERAGE      EARNED/      YIELD/    AVERAGE      EARNED/     YIELD/
                                     BALANCE        PAID        RATE     BALANCE       PAID        RATE
---------------------------------------------------------------------------------------------------------
                                      (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                <C>           <C>          <C>      <C>           <C>         <C>
ASSETS
Government Securities..........    Ps.   570.4   Ps.  211.9    37.14%  Ps. 1,665.7   Ps. 84.2      5.05%
Loans
   Private Sector..............        4,917.0      1,333.5    27.12       1,972.4      101.2      5.13
   Public Sector...............        8,241.1      2,931.3    35.57             -          -         -
                                  ---------------------------------------------------------------------
Total Loans....................       13,158.1      4,264.8    32.41       1,972.4      101.2      5.13
Other..........................        1,327.3        444.9    33.52       8,026.6      160.2      2.00
                                  ---------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..       15,055.8      4,921.6    32.69%     11,664.7      345.6      2.96%
Cash and Gold..................          224.6            -        -         189.1          -         -
Equity in Other Companies......          533.8            -        -         250.8          -         -
Other Assets...................        2,072.7            -        -         664.2          -         -
Allowances.....................       (1,270.2)           -        -        (139.6)         -         -
                                  ---------------------------------------------------------------------
TOTAL ASSETS...................    Ps.16,616.7            -        -   Ps.12,629.2          -         -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............    Ps.   160.3   Ps.   17.0    10.61%  Ps.    32.6   Ps.  0.4      1.22%
   Saving Accounts.............          991.7          6.5     0.65         447.6        2.5      0.56
   Time Deposits...............        2,892.1      1,203.6    41.62       3,424.3      119.5      3.49
                                  ---------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS        4,044.1      1,227.1    30.34       3,904.5      122.4      3.13
Argentine Central Bank.........        7,082.4      2,218.4    31.32           3.5        0.1      2.66
Other Financial Entities.......          197.1         29.5    14.96       2,557.6      214.2      8.37
Debt Securities................           16.2          2.4    14.59       2,530.1      147.9      5.85
Other .........................          763.2        199.1    26.10       1,599.7      127.6      7.97
                                  ---------------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES....................       12,103.0      3,676.5    30.38%     10,595.4      612.2      5.78%
Demand deposits................          617.5            -        -         230.0          -         -
Other Liabilities..............        2,434.5            -        -         708.5          -         -
Minority Interests.............          146.1            -        -           0.0          -         -
Shareholders' Equity...........        2,410.9            -        -             -          -         -
                                  ---------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...    Ps.17,712.0            -        -   Ps.11,533.9          -         -
SPREAD AND NET YIELD
Interest Rate Spread...........                                 2.31%                             (2.81)%
Cost of Funds Supporting
  Interest-Earning Assets......                                24.42                               5.25
Net Yield on Interest-Earning
Assets.........................                                 8.27                              (2.29)
-------------------------------------------------------------------------------------------------------

<CAPTION>
                                            GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2002 (*)
                                      ----------------------------------------------------------------
                                                                                                TOTAL
                                      ----------------------------------------------------------------
                                                                      INTEREST                 AVERAGE
                                             AVERAGE                   EARNED/                  YIELD/
                                             BALANCE                    PAID                     RATE
-------------------------------------------------------------------------------------------------------
                                    (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                        <C>                       <C>                       <C>
ASSETS
Government Securities..........            Ps. 2,236.1               Ps.  296.1                 13.24%
Loans
   Private Sector..............                6,889.4                  1,434.7                 20.82
   Public Sector...............                8,241.1                  2,931.3                 35.57
                                      ---------------------------------------------------------------
Total Loans....................               15,130.5                  4,366.0                 28.86
Other..........................                9,353.9                    605.1                  6.47
                                      ---------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..               26,720.5                  5,267.2                 19.71%
Cash and Gold..................                  413.7                        -                     -
Equity in Other Companies......                  784.6                        -                     -
Other Assets...................                2,736.9                        -                     -
Allowances.....................               (1,409.8)                       -                     -
                                      ---------------------------------------------------------------
TOTAL ASSETS...................            Ps.29,245.9                        -                     -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............            Ps.   192.9               Ps.   17.4                  9.02%
   Saving Accounts.............                1,439.3                      9.0                  0.62
   Time Deposits...............                6,316.4                  1,323.1                 20.95
                                      ---------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS                7,948.6                  1,349.5                 16.98
Argentine Central Bank.........                7,085.9                  2,218.5                 31.31
Other Financial Entities.......                2,754.7                    243.7                  8.85
Debt Securities................                2,546.3                    150.3                  5.90
Other .........................                2,362.9                    326.7                 13.83
                                      ---------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES....................               22,698.4                  4,288.7                 18.89%
Demand deposits................                  847.5                        -                     -
Other Liabilities..............                3,143.0                        -                     -
Minority Interests.............                  146.1                        -                     -
Shareholders' Equity...........                2,410.9                        -                     -
                                      ---------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...            Ps.29,245.9                        -                     -
SPREAD AND NET YIELD
Interest Rate Spread...........                                                                  0.82%
Cost of Funds Supporting
  Interest-Earning Assets......                                                                 16.05
Net Yield on Interest-Earning
Assets.........................                                                                  3.66
-----------------------------------------------------------------------------------------------------
</TABLE>

(*) Rates include the CER adjustement.

                                      -57-

<PAGE>

<TABLE>
<CAPTION>
                                            GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2002 (*)
                                                                  PESOS                            DOLLARS
                                  -------------------------------------------------------------------------
                                                    INTEREST     AVERAGE                INTEREST   AVERAGE
                                        AVERAGE      EARNED/      REAL/     AVERAGE      EARNED/    REAL/
                                        BALANCE       PAID        RATE      BALANCE       PAID      RATE
-----------------------------------------------------------------------------------------------------------
                                           (in millions of December 31, 2002, constant Pesos, except)
<S>                                  <C>            <C>         <C>       <C>           <C>        <C>
ASSETS
Government Securities............    Ps.    570.4   Ps. 211.9   (37.22)%  Ps. 1,665.7   Ps. 84.2    61.74%
Loans
   Private Sector................         4,917.0     1,333.5   (41.81)       1,972.4      101.2    61.85
   Public Sector.................         8,241.1     2,931.3   (37.94)             -          -        -
                                  -----------------------------------------------------------------------
Total Loans......................        13,158.1     4,264.8   (39.38)       1,972.4      101.2    61.85
Other............................         1,327.3       444.9   (38.88)       8,026.6      160.2    57.03
                                  -----------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS....        15,055.8     4,921.6   (39.26)%     11,664.7      345.6    58.52%
Cash and Gold....................           224.6           -        -          189.1          -        -
Equity in Other Companies........           533.8           -        -          250.8          -        -
Other Assets.....................         2,072.7           -        -          664.2          -        -
Allowances.......................        (1,270.2)          -        -         (139.6)         -        -
                                  -----------------------------------------------------------------------
TOTAL ASSETS.....................    Ps. 16,616.7           -        -    Ps.12,629.2          -        -
LIABILITIES AND EQUITY
Deposits
   Current Accounts..............    Ps.    160.3   Ps.  17.0   (49.36)%  Ps.    32.6   Ps.  0.4    55.83%
   Saving Accounts...............           991.7         6.5   (53.92)         447.6        2.5    54.82
   Time Deposits.................         2,892.1     1,203.6   (35.17)       3,424.3      119.5    59.33
                                  -----------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS           4,044.1     1,227.1   (40.33)       3,904.5      122.4    58.78
Argentine Central Bank...........         7,082.4     2,218.4   (39.88)           3.5        0.1    58.05
Other Financial Entities.........           197.1        29.5   (47.37)       2,557.6      214.2    66.85
Debt Securities..................            16.2         2.4   (47.54)       2,530.1      147.9    62.96
Other ...........................           763.2       199.1   (42.27)       1,599.7      127.6    66.23
                                  -----------------------------------------------------------------------
TOTAL INTEREST-BEARING
  LIABILITIES                            12,103.0     3,676.5   (40.32)%     10,595.4      612.2    62.85%
Demand deposits..................           617.5           -        -          230.0          -        -
Other Liabilities................         2,434.5           -        -          708.5          -        -
Minority Interests...............           146.1           -        -              -          -        -
Shareholders' Equity.............         2,410.9           -        -              -          -        -
                                  -----------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY.....    Ps. 17,712.0           -        -    Ps.11,533.9          -        -
SPREAD AND NET YIELD
Interest Rate Spread.............                                 1.06%                             (4.33)%
Cost of Funds Supporting
  Interest-Earning Assets........                               (43.04)                             62.03
Net Yield on Interest-Earning
  Assets.........................                               (50.44)                             50.43
---------------------------------------------------------------------------------------------------------
<CAPTION>
                                            GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2002 (*)
                                                                                          TOTAL
                                           --------------------------------------------------------
                                                                    INTEREST             AVERAGE
                                             AVERAGE                EARNED/               REAL/
                                             BALANCE                  PAID                RATE
---------------------------------------------------------------------------------------------------
                                   (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                        <C>                     <C>                   <C>
ASSETS
Government Securities............          Ps.  2,236.1            Ps.  296.1             36.49%
Loans
   Private Sector................               6,889.4               1,434.7            (12.13)
   Public Sector.................               8,241.1               2,931.3            (37.94)
                                   ------------------------------------------------------------
Total Loans......................              15,130.5               4,366.0            (26.18)
Other............................               9,353.9                 605.1             43.42
                                   ------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS....              26,720.5               5,267.2              3.43%
Cash and Gold....................                 413.7                     -                 -
Equity in Other Companies........                 784.6                     -                 -
Other Assets.....................               2,736.9                     -                 -
Allowances.......................              (1,409.8)                    -                 -
                                   ------------------------------------------------------------
TOTAL ASSETS.....................          Ps. 29,245.9                     -                 -
LIABILITIES AND EQUITY
Deposits
   Current Accounts..............          Ps.    192.9            Ps.   17.4            (31.57)%
   Saving Accounts...............               1,439.3                   9.0            (20.11)
   Time Deposits.................               6,316.4               1,323.1             16.06
                                   ------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS                 7,948.6               1,349.5              8.35
Argentine Central Bank...........               7,085.9               2,218.5            (39.83)
Other Financial Entities.........               2,754.7                 243.7             58.68
Debt Securities..................               2,546.3                 150.3             62.26
Other ...........................               2,362.9                 326.7             31.19
                                   ------------------------------------------------------------
TOTAL INTEREST-BEARING
  LIABILITIES                                  22,698.4               4,288.7              7.84%
Demand deposits..................                 847.5                     -                 -
Other Liabilities................               3,143.0                     -                 -
Minority Interests...............                 146.1                     -                 -
Shareholders' Equity.............               2,410.9                     -                 -
                                   ------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY.....          Ps. 29,245.9                     -                 -
SPREAD AND NET YIELD
Interest Rate Spread.............                                                         (4.41)%
Cost of Funds Supporting
  Interest-Earning Assets........                                                          2.83
Net Yield on Interest-Earning
  Assets.........................                                                         (6.41)
-----------------------------------------------------------------------------------------------
</TABLE>
(*) Rates include the CER adjustement.

The following tables show Grupo Galicia's consolidated average balances,
interest earned or paid and nominal interest rates for interest-earning assets
and interest-bearing liabilities for the fiscal year ended December 31, 2001,
and for the six-month period ended December 31, 2000, and Banco Galicia's
consolidated average balances, interest earned or paid and nominal interest
rates for interest-earning assets and interest-bearing liabilities for its
fiscal year ended June 30, 2000.

                                      -58-
<PAGE>

<TABLE>
<CAPTION>
                                             GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2001
                                  --------------------------------------------------------------------------
                                                                PESOS                                DOLLARS
                                  --------------------------------------------------------------------------
                                                  INTEREST     AVERAGE                  INTEREST     AVERAGE
                                     AVERAGE      EARNED/       YIELD/     AVERAGE      EARNED/       YIELD/
                                     BALANCE        PAID         RATE      BALANCE        PAID        RATE
------------------------------------------------------------------------------------------------------------
                                       (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                <C>           <C>           <C>       <C>           <C>           <C>
ASSETS
Government Securities..........    Ps.    42.8   Ps.    6.8     15.82%   Ps. 2,466.6   Ps.  268.2     10.87%
Loans
   Private Sector..............        3,869.5        977.7     25.27        9,755.0      1,182.0     12.12
   Public Sector...............          223.5         48.1     21.51        5,981.4        970.5     16.23
                                  -------------------------------------------------------------------------
Total Loans....................        4,093.0      1,025.8     25.06       15,736.4      2,152.5     13.68
Other..........................          135.2          8.1      5.98        4,544.7        314.8      6.93
                                  -------------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..        4,271.0      1,040.7     24.37%      22,747.7      2,735.5     12.03%
Cash and Gold..................          458.9            -         -          289.0            -         -
Equity in Other Companies......          275.0            -         -          344.9            -         -
Other Assets...................        2,993.5            -         -        1,065.6            -         -
Allowances.....................         (314.6)           -         -         (439.9)           -         -
                                  -------------------------------------------------------------------------
TOTAL ASSETS...................    Ps. 7,683.8            -         -    Ps.24,007.3            -         -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............    Ps.   202.5   Ps.   17.0      8.41    Ps.   531.0   Ps.   35.4      6.66
   Saving Accounts.............          997.4         16.8      1.69        1,403.3         21.2      1.51
   Time Deposits...............        2,265.5        317.8     14.03       11,861.6      1,058.6      8.92
                                  -------------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS        3,465.4        351.6     10.15       13,795.9      1,115.2      8.08
Argentine Central Bank.........          110.8         10.7      9.66           37.6          3.1      8.14
Other Financial Entities.......           37.4         14.2     38.01        1,656.4        131.7      7.95
Debt Securities................              -            -         -        2,908.8        243.6      8.37
Other .........................            1.5          0.2     14.29        1,825.7        137.6      7.54
                                  -------------------------------------------------------------------------
TOTAL INTEREST-BEARING
  LIABILITIES..................        3,615.1        376.7     10.42%      20,224.4      1,631.2      8.07%
Demand deposits................        1,070.4            -         -          120.6            -         -
Other Liabilities..............        1,061.0            -         -        2,315.5            -         -
Minority Interests.............          257.1            -         -              -            -         -
Shareholders' Equity...........        3,027.0            -         -              -            -         -
                                  -------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...    Ps. 9,030.6            -         -    Ps.22,660.5            -         -
SPREAD AND NET YIELD
Interest Rate Spread...........                                 13.95%                                 3.96%
Cost of Funds Supporting
  Interest-Earning Assets......                                  8.82                                  7.17
Net Yield on Interest-Earning
  Assets.......................                                 15.55                                  4.85
-----------------------------------------------------------------------------------------------------------

<CAPTION>
                                            GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2001
                                  ----------------------------------------------------------------
                                                                                          TOTAL
                                  ----------------------------------------------------------------
                                                                INTEREST                 AVERAGE
                                      AVERAGE                   EARNED/                  YIELD/
                                      BALANCE                     PAID                    RATE
--------------------------------------------------------------------------------------------------
                                  (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                <C>                         <C>                       <C>
ASSETS
Government Securities..........    Ps. 2,509.4                 Ps.  275.0                   10.96%
Loans
   Private Sector..............       13,624.5                    2,159.7                   15.85
   Public Sector...............        6,204.9                    1,018.6                   16.42
                                  ---------------------------------------------------------------
Total Loans....................       19,829.4                    3,178.3                   16.03
Other..........................        4,679.9                      322.9                    6.90
                                  ---------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..       27,018.7                    3,776.2                   13.98%
Cash and Gold..................          747.9                          -                       -
Equity in Other Companies......          619.9                          -                       -
Other Assets...................        4,059.1                          -                       -
Allowances.....................         (754.5)                         -                       -
                                  ---------------------------------------------------------------
TOTAL ASSETS...................    Ps.31,691.1                          -                       -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............    Ps.   733.5                 Ps.   52.4                    7.15
   Saving Accounts.............        2,400.7                       38.0                    1.58
   Time Deposits...............       14,127.1                    1,376.4                    9.74
                                  ---------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS       17,261.3                    1,466.8                    8.50
Argentine Central Bank.........          148.3                       13.8                    9.28
Other Financial Entities.......        1,693.8                      145.9                    8.61
Debt Securities................        2,908.8                      243.6                    8.37
Other .........................        1,827.3                      137.8                    7.54
                                  ---------------------------------------------------------------
TOTAL INTEREST-BEARING
  LIABILITIES..................       23,839.5                    2,007.9                    8.42%
Demand deposits................        1,191.0                          -                       -
Other Liabilities..............        3,376.5                          -                       -
Minority Interests.............          257.1                          -                       -
Shareholders' Equity...........        3,027.0                          -                       -
                                  ---------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...    Ps.31,691.1                          -                       -
SPREAD AND NET YIELD
Interest Rate Spread...........                                                              5.56%
Cost of Funds Supporting
  Interest-Earning Assets......                                                              7.43
Net Yield on Interest-Earning
  Assets.......................                                                              6.54
-------------------------------------------------------------------------------------------------
</TABLE>

                                      -59-

<PAGE>

<TABLE>
<CAPTION>
                                           GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2000 (*)
                                  -------------------------------------------------------------------------
                                                              PESOS                                 DOLLARS
                                  -------------------------------------------------------------------------
                                                 INTEREST    AVERAGE                  INTEREST      AVERAGE
                                     AVERAGE      EARNED/     YIELD/     AVERAGE       EARNED/       YIELD/
                                     BALANCE       PAID       RATE       BALANCE        PAID         RATE
-----------------------------------------------------------------------------------------------------------
                                       (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                 <C>          <C>         <C>       <C>           <C>            <C>
ASSETS
Government Securities..........     Ps.   47.0   Ps.  2.8     12.09%   Ps. 2,924.3   Ps.  133.0      9.10%
Loans
   Private Sector..............        4,233.8      463.8     21.91        9,865.5        596.3     12.09
   Public Sector...............          310.4       20.3     13.09        5,096.7        346.9     13.61
                                  -----------------------------------------------------------------------
Total Loans....................        4,544.2      484.1     21.30       14,962.2        943.2     12.61
Other..........................          221.1        8.1      7.31        5,357.7        194.0      7.24
                                  -----------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..        4,812.3      495.0     20.57%      23,244.2      1,270.2     10.93%
Cash and Gold..................          447.8          -         -          230.5            -         -
Equity in Other Companies......          388.4          -         -          335.5            -         -
Other Assets...................        3,516.0          -         -          794.5            -         -
Allowances.....................         (236.4)         -         -         (391.7)           -         -
                                  -----------------------------------------------------------------------
TOTAL ASSETS...................     Ps.8,928.1          -         -    Ps.24,213.0            -         -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............              -          -         -              -            -         -
   Saving Accounts.............     Ps.1,359.4   Ps. 12.7      1.86%   Ps. 1,415.5   Ps.   13.1      1.85%
   Time Deposits...............        3,025.9      144.4      9.54       11,893.3        431.6      7.26
                                  -----------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS        4,385.3      157.1      7.16       13,308.8        444.7      6.68
Argentine Central Bank.........              -          -         -            6.3            -         -
Other Financial Entities.......           52.6        4.2     15.77        1,728.3         75.8      8.77
Debt Securities................              -          -         -        3,167.6        146.1      9.23
Other .........................              -          -         -        2,260.2         98.5      8.72
                                  -----------------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES....................        4,437.9      161.3      7.27%      20,471.2        765.1      7.48%
Demand Deposits................        1,222.6          -         -          100.5            -         -
Other Liabilities..............        1,134.4          -         -        2,858.5            -         -
Minority Interests.............          239.6          -         -              -            -         -
Shareholders' Equity...........        2,676.4          -         -              -            -         -
                                  -----------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...     Ps.9,710.9          -         -    Ps.23,430.2            -         -
SPREAD AND NET YIELD
Interest Rate Spread...........                               13.30%                                 3.45%
Cost of Funds Supporting
  Interest-Earning Assets......                                6.70                                  6.58
Net Yield on Interest-Earning
Assets.........................                               13.87                                  4.35
---------------------------------------------------------------------------------------------------------

<CAPTION>
                                       GRUPO GALICIA, FISCAL YEAR ENDED DECEMBER 31, 2000 (*)
                                  ---------------------------------------------------------------
                                                                                          TOTAL
                                  ---------------------------------------------------------------
                                                                    INTEREST             AVERAGE
                                              AVERAGE                EARNED/              YIELD/
                                              BALANCE                   PAID               RATE
-------------------------------------------------------------------------------------------------
                                  (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                       <C>                     <C>                    <C>
ASSETS
Government Securities..........           Ps. 2,971.3             Ps.  135.8                9.14%
Loans
   Private Sector..............              14,099.3                1,060.1               15.04
   Public Sector...............               5,407.1                  367.2               13.58
                                  --------------------------------------------------------------
Total Loans....................              19,506.4                1,427.3               14.63
Other..........................               5,578.8                  202.1                7.24
                                  --------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS..              28,056.5                1,765.2               12.58%
Cash and Gold..................                 678.3                      -                   -
Equity in Other Companies......                 723.9                      -                   -
Other Assets...................               4,310.5                      -                   -
Allowances.....................                (628.1)                     -                   -
                                  --------------------------------------------------------------
TOTAL ASSETS...................           Ps.33,141.1                      -                   -
LIABILITIES AND EQUITY
Deposits
   Current Accounts............                     -                      -                   -
   Saving Accounts.............           Ps. 2,774.9             Ps.   25.8                1.86%
   Time Deposits...............              14,919.2                  576.0                7.72
                                  --------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS              17,694.1                  601.8                6.80
Argentine Central Bank.........                   6.3                      -                   -
Other Financial Entities.......               1,780.9                   80.0                8.98
Debt Securities................               3,167.6                  146.1                9.23
Other .........................               2,260.2                   98.5                8.72
                                  --------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES....................              24,909.1                  926.4                7.44%
Demand Deposits................               1,323.1                      -                   -
Other Liabilities..............               3,992.9                      -                   -
Minority Interests.............                 239.6                      -                   -
Shareholders' Equity...........               2,676.4                      -                   -
                                  --------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...           Ps.33,141.1                      -                   -
SPREAD AND NET YIELD
Interest Rate Spread...........                                                             5.14%
Cost of Funds Supporting
  Interest-Earning Assets......                                                             6.60
Net Yield on Interest-Earning
Assets.........................                                                             6.98
------------------------------------------------------------------------------------------------
</TABLE>

(*) For the 6-month period ended December 31, 2000. Rates have been annualized.

                                      -60-

<PAGE>

<TABLE>
<CAPTION>
                                                               BANCO GALICIA, FISCAL YEAR ENDED JUNE 30, 2000
                                            -----------------------------------------------------------------------------
                                                                                PESOS
                                            -----------------------------------------------------------------------------
                                                             INTEREST          AVERAGE                       INTEREST
                                                AVERAGE       EARNED/           YIELD/      AVERAGE           EARNED/
                                                BALANCE        PAID             RATE        BALANCE            PAID
-------------------------------------------------------------------------------------------------------------------------
                                                   (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                         <C>             <C>                <C>       <C>                <C>
ASSETS
Government Securities..................     Ps.     296.9   Ps.    38.2        12.88%    Ps.    2,845.9     Ps.   289.0
Loans
   Private Sector......................           4,023.9         922.7        22.93            9,302.1         1,083.3
   Public Sector.......................             457.6          57.0        12.46            4,311.2           553.5
                                            ---------------------------------------------------------------------------
Total Loans............................           4,481.5         979.7        21.86           13,613.3         1,636.8
Other..................................             483.4          36.7         7.59            4,287.1           252.7
                                            ---------------------------------------------------------------------------
TOTAL INTEREST-EARNING
ASSETS.................................           5,261.8       1,054.6        20.04%          20,746.3         2,178.5
Cash and Gold..........................             447.6             -            -              282.7               -
Equity in Other Companies..............             378.3             -            -              429.9               -
Other Assets...........................           2,853.3             -            -              795.1               -
Allowances.............................            (292.7)            -            -             (400.4)              -
                                            ---------------------------------------------------------------------------
TOTAL ASSETS...........................     Ps.   8,648.3             -            -     Ps.   21,853.6               -
LIABILITIES AND EQUITY
Deposits
   Current Accounts....................                 -             -            -                  -               -
   Saving Accounts.....................     Ps.   1,401.5   Ps.    28.6         2.04%    Ps.    1,473.6     Ps.    26.6
   Time Deposits.......................           2,976.1         290.8         9.77           10,474.1           709.3
                                            ---------------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS                   4,377.6         319.4         7.30           11,947.7           735.9
Argentine Central Bank.................                 -             -            -                8.3             0.2
Other Financial Entities...............              64.2           7.6        11.90            1,615.8           139.4
Debt Securities........................                 -             -            -            2,781.0           244.7
Other .................................               3.9           0.2         5.56            2,157.4           177.8
                                            ---------------------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES............................           4,445.7         327.2         7.36%          18,510.2         1,298.0
Demand deposits........................           1,319.4             -            -              105.5               -
Other Liabilities......................           1,045.7             -            -            2,271.0               -
Minority Interests.....................              53.1             -            -                  -               -
Shareholders' Equity...................           2,751.3             -            -                  -               -
                                            ---------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...........     Ps.   9,615.2             -            -     Ps.   20,886.7               -
SPREAD AND NET YIELD
Interest Rate Spread...................                                        12.68%
Cost of Funds Supporting
Interest-Earning Assets................                                         6.22
Net Yield on Interest-Earning Assets...                                        13.82
-----------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                     BANCO GALICIA, FISCAL YEAR ENDED JUNE 30, 2000
                                            ------------------------------------------------------------------
                                                 DOLLARS                                         TOTAL
                                            ------------------------------------------------------------------
                                                AVERAGE                         INTEREST        AVERAGE
                                                 YIELD/         AVERAGE          EARNED/         YIELD/
                                                  RATE          BALANCE           PAID           RATE
--------------------------------------------------------------------------------------------------------------
                                            (in millions of December 31, 2002, constant Pesos, except rates)
<S>                                             <C>        <C>              <C>                 <C>
ASSETS
Government Securities..................          10.16%    Ps.   3,142.8    Ps.   327.2          10.41%
Loans
   Private Sector......................          11.65          13,326.0        2,006.0          15.05
   Public Sector.......................          12.84           4,768.8          610.5          12.80
                                               -------------------------------------------------------
Total Loans............................          12.02          18,094.8        2,616.5          14.46
Other..................................           5.90           4,770.5          289.4           6.07
                                               -------------------------------------------------------
TOTAL INTEREST-EARNING
ASSETS.................................          10.50%         26,008.1        3,233.1          12.43%
Cash and Gold..........................              -             730.3              -              -
Equity in Other Companies..............              -             808.2              -              -
Other Assets...........................              -           3,648.4              -              -
Allowances.............................              -            (693.1)             -              -
                                               -------------------------------------------------------
TOTAL ASSETS...........................              -     Ps.  30,501.9              -              -
LIABILITIES AND EQUITY
Deposits
   Current Accounts....................              -                 -              -              -
   Saving Accounts.....................           1.81%    Ps.   2,875.1    Ps.    55.2           1.92%
   Time Deposits.......................           6.77          13,450.2        1,000.1           7.44
                                               -------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS                   6.16          16,325.3        1,055.3           6.46
Argentine Central Bank.................           2.63               8.3            0.2           2.63
Other Financial Entities...............           8.63           1,680.0          147.0           8.75
Debt Securities........................           8.80           2,781.0          244.7           8.80
Other .................................           8.24           2,161.3          178.0           8.24
                                               -------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES............................           7.01%         22,955.9        1,625.2           7.08%
Demand deposits........................              -           1,424.9              -              -
Other Liabilities......................              -           3,316.7              -              -
Minority Interests.....................              -              53.1              -              -
Shareholders' Equity...................              -           2,751.3              -              -
                                               -------------------------------------------------------
TOTAL LIABILITIES AND EQUITY...........              -     Ps.  30,501.9              -              -
SPREAD AND NET YIELD
Interest Rate Spread...................           3.49%                                           5.35%
Cost of Funds Supporting
Interest-Earning Assets................           6.26                                            6.25
Net Yield on Interest-Earning Assets...           4.24                                            6.18
------------------------------------------------------------------------------------------------------
</TABLE>

CHANGES IN NET INTEREST INCOME--VOLUME AND RATE ANALYSIS

The following table allocates, by currency, changes in Grupo Galicia's
consolidated interest income and interest expenses between changes in the
average volume of interest-earning assets and interest-bearing liabilities and
changes in their respective nominal interest rates for (i) the fiscal year ended
December 31, 2002 compared with the fiscal year ended December 31, 2001; (ii)
the fiscal year ended December 31, 2001, compared with the six-month period
ended December 31, 2000 and (iii) the six-month period ended December 31, 2000,
compared with the year ended June 30, 2000. For the latter period the comparison
is made with balances for Banco Galicia. Volume and interest rate variances were
calculated based on movements in average balances over the period and changes in
nominal interest rates on average interest-earning assets and average
interest-bearing liabilities.

                                      -61-

<PAGE>

The comparison between the changes in Grupo Galicia's net interest income and
net interest expenses for the six-month period ended December 30, 2000, and
Banco Galicia's net interest income and net interest expense for the year ended
June 30, 2000, has been prepared on an annualized basis. That is, for the
purposes of the comparison Grupo Galicia's net interest income and net interest
expenses for the six-month period ended December 30, 2000 have been annualized.

<TABLE>
<CAPTION>
                                                                     FY 2001/ 6 MONTHS ENDED        6 MONTHS ENDED DEC. 31, 2000(1)/
                                FY 2002/ FY2001, INCREASE            DEC. 31,2000(1), INCREASE       BANCO GALICIA FY2000, INCREASE
                               (DECREASE)DUE TO CHANGES IN         (DECREASE) DUE TO CHANGES IN      (DECREASE) DUE TO CHANGES IN
                         -------------------------------------   --------------------------------   --------------------------------
                          VOLUME         RATE       NET CHANGE    VOLUME      RATE     NET CHANGE    VOLUME      RATE    NET CHANGE
                         -------------------------------------   --------------------------------   --------------------------------
<S>                      <C>          <C>           <C>          <C>        <C>        <C>          <C>        <C>       <C>
INTEREST EARNING ASSETS
Government securities
     Pesos...........    Ps.  185.1   Ps.    20.0   Ps.  205.1   Ps. (0.4)  Ps.  1.5   Ps.    1.1   Ps.(30.4)  Ps.(2.2)  Ps.  (32.6)
     Dollars.........         (69.5)       (114.5)      (184.0)      (9.0)      11.2          2.2        8.3     (31.2)       (22.9)
                         -------------------------------------   --------------------------------   -------------------------------
Total................         115.6         (94.5)        21.1       (9.4)      12.7          3.3      (22.1)    (33.4)       (55.5)
Loans
Private Sector
     Pesos...........         279.9          75.9        355.8      (63.9)     114.2         50.3       33.2     (28.4)         4.8
     Dollars.........        (627.4)       (453.4)    (1,080.8)     (13.3)       2.6        (10.7)      67.1      42.4        109.5
                         -------------------------------------   --------------------------------   -------------------------------
Total................        (347.5)       (377.5)      (725.0)     (77.2)     116.8         39.6      100.3      14.0        114.3
Public Sector
     Pesos...........       2,831.7          51.5      2,883.2       (5.7)      13.1          7.4      (19.4)      3.1        (16.3)
     Dollars.........        (485.3)       (485.2)      (970.5)     131.3      145.5        276.8      105.5      34.7        140.2
                         -------------------------------------   --------------------------------   -------------------------------
Total................       2,346.4        (433.7)     1,912.7      125.6      158.6        284.2       86.1      37.8        123.9
Other
     Pesos...........         286.3         150.5        436.8       (5.5)      (2.6)        (8.1)     (19.2)     (1.3)       (20.5)
     Dollars.........       2,187.9      (2,033.3)       154.6      (56.8)     (16.4)       (73.2)      70.6      64.7        135.3
                         -------------------------------------   --------------------------------   -------------------------------
Total................       2,474.2      (1,882.8)       591.4      (62.3)     (19.0)       (81.3)      51.4      63.4        114.8
  TOTAL INTEREST-EARNING
   ASSETS
     Pesos...........       3,583.0         297.9      3,880.9      (75.5)     126.2         50.7      (35.8)    (28.8)       (64.6)
     Dollars.........       1,005.7      (3,086.4)    (2,080.7)      52.2      142.9        195.1      251.5     110.6        362.1
                         -------------------------------------   -------------------------------- ---------------------------------
TOTAL................    Ps.4,588.7   Ps.(2,788.5)  Ps.1,800.2   Ps.(23.3)  Ps.269.1   Ps.  245.8   Ps.215.7   Ps.81.8   Ps.  297.5
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING
LIABILITIES
Demand Account
     Pesos...........             -             -            -       17.0          -         17.0          -         -            -
     Dollars.........         (18.8)        (16.2)       (35.0)      35.4          -         35.4          -         -            -
                         -------------------------------------   --------------------------------   -------------------------------
Total................         (18.8)        (16.2)       (35.0)      52.4          -         52.4          -         -            -
Saving Account
     Pesos...........             -         (10.3)       (10.3)      (6.3)      (2.2)        (8.5)      (0.9)     (2.4)        (3.3)
     Dollars.........          (9.7)         (9.0)       (18.7)      (0.2)      (4.8)        (5.0)      (1.1)      0.7         (0.4)
                         -------------------------------------   --------------------------------   -------------------------------
Total................          (9.7)        (19.3)       (29.0)      (6.5)      (7.0)       (13.5)      (2.0)     (1.7)        (3.7)
Time Deposits
     Pesos...........         109.2         776.6        885.8      (33.4)      62.5         29.1        5.2      (7.2)        (2.0)
     Dollars.........        (505.9)       (433.2)      (939.1)      (2.4)     197.7        195.3      100.7      53.3        154.0
                         -------------------------------------   --------------------------------   -------------------------------
Total................        (396.7)        343.4        (53.3)     (35.8)     260.2        224.4      105.9      46.1        152.0
With the Argentine
 Central Bank
     Pesos...........       2,130.9          76.8      2,207.7       10.7          -         10.7          -         -            -
     Dollars.........          (1.7)         (1.3)        (3.0)       1.7        1.3          3.0          -      (0.2)        (0.2)
                         -------------------------------------   --------------------------------   -------------------------------
Total................       2,129.2          75.5      2,204.7       12.4        1.3         13.7          -      (0.2)        (0.2)
With Other Financial
 Entities
     Pesos...........          17.9          (2.6)        15.3       (1.5)       7.4          5.9       (0.9)      1.5          0.6
     Dollars.........          75.2           7.3         82.5       (6.1)     (13.8)       (19.9)       9.8       2.4         12.2
                         -------------------------------------   --------------------------------   -------------------------------
Total................          93.1           4.7         97.8       (7.6)      (6.4)       (14.0)       8.9       3.9         12.8
Negotiable Obligations
     Pesos...........           2.4             -          2.4
     Dollars.........         (28.9)        (66.8)       (95.7)     (22.9)     (25.8)       (48.7)      35.2      12.5         47.7
                         -------------------------------------   --------------------------------   -------------------------------
Total................         (26.5)        (66.8)       (93.3)     (22.9)     (25.8)       (48.7)      35.2      12.5         47.7
Other liabilities
     Pesos...........         198.8           0.1        198.9        0.2          -          0.2       (0.2)        -         (0.2)
     Dollars.........         (18.9)          8.9        (10.0)     (35.0)     (24.5)       (59.5)       8.7      10.5         19.2
                         -------------------------------------   --------------------------------   -------------------------------
Total................         179.9           9.0        188.9      (34.8)     (24.5)       (59.3)       8.5      10.5         19.0
TOTAL INTEREST BEARING
 LIABILITIES
     Pesos...........       2,459.2         840.6      3,299.8      (13.3)      67.7         54.4        3.2      (8.1)        (4.9)
     Dollars.........        (508.7)       (510.3)    (1,019.0)     (29.5)     130.1        100.6      153.3      79.2        232.5
                         -------------------------------------   --------------------------------   -------------------------------
TOTAL................    Ps.1,950.5   Ps.   330.3   Ps.2,280.8   Ps.(42.8)  Ps.197.8   Ps.  155.0   Ps.156.5   Ps.71.1   Ps.  227.6
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Grupo Galicia's interests for the six-month period ended December 31, 2000,
    have been annualized, in order to make the comparison with the years ended
    December 31, 2001, and June 30, 2000, possible.

                                      -62-

<PAGE>

INTEREST-EARNING ASSETS--NET YIELD ON INTEREST-EARNING ASSETS

The following table analyzes, by currency of denomination, the levels of Grupo
Galicia's and Banco Galicia's average interest-earning assets and net interest
earned, and illustrates the net yields and spreads obtained, for each of the
periods indicated.

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA                    BANCO GALICIA
                                                  --------------------------------------------     --------------
                                                        FISCAL YEAR ENDED       6 MONTHS ENDED       FISCAL YEAR
                                                           DECEMBER 31,         DECEMBER 31, (*)    ENDED JUNE 30,
                                                  --------------------------------------------     --------------
                                                       2002          2001             2000               2000
-----------------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>                <C>
TOTAL AVERAGE INTEREST-EARNING ASSETS
    Pesos......................................   Ps. 15,055.8   Ps.  4,271.0     Ps.  4,812.3       Ps.   5,261.8
    Dollars....................................       11,664.7       22,747.7         23,244.2            20,746.3
                                                  --------------------------------------------      --------------
TOTAL..........................................   Ps. 26,720.5   Ps. 27,018.7     Ps. 28,056.5       Ps.  26,008.1
NET INTEREST EARNED (1)
    Pesos......................................   Ps.  1,245.1   Ps.    664.0     Ps.    333.7       Ps.     727.4
    Dollars....................................         (266.6)       1,104.3            505.1               880.5
                                                  --------------------------------------------      --------------
TOTAL..........................................   Ps.    978.5   Ps.  1,768.3     Ps.    838.8       Ps.   1,607.9
NET YIELD ON INTEREST-EARNING ASSETS (2) (%)
    Pesos......................................           8.27%         15.55%           13.87%              13.82%
    Dollars....................................          (2.29)          4.85             4.35                4.24
WEIGHTED-AVERAGE YIELD.........................           3.66           6.54             5.98                6.18
INTEREST SPREAD, NOMINAL BASIS (3) (%)
    Pesos......................................           2.31          13.95            13.30               12.68
    Dollars....................................          (2.82)          3.96             3.45                3.49
WEIGHTED-AVERAGE YIELD.........................           0.82           5.56             5.14                5.35
NET YIELD ON INTEREST-EARNING ASSETS,
 REAL BASIS (4) (%)
    Pesos......................................         (50.44)             -                -                   -
    Dollars....................................          50.43              -                -                   -
WEIGHTED-AVERAGE YIELD.........................          (6.41)             -                -                   -
INTEREST SPREAD, REAL BASIS (4) (%)
    Pesos......................................           1.06              -                -                   -
    Dollars....................................          (4.33)             -                -                   -
WEIGHTED-AVERAGE YIELD.........................          (4.41)             -                -                   -
------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Rates have been annualized.

(1) Net interest earned corresponds to the Group's or the Bank's net financial
    income plus:

     - Credit related fees (included in "Income from Services - In Relation to
       Lending Transactions" in the Income Statement)

     - Contributions to the deposit insurance system, and contributions and
       taxes on financial income included in the income statement line
       "Financial Expenses - Other", less:

     - Net income from the corporate securities included under "Financial
       Income/Expenses- Interest Income and Holdings Gains/Losses from
       Government and Corporate Securities", in the income statement and

     - Differences in quotation of gold and foreign currency and premiums on
       foreign currency transactions, included in "Financial Income/Expenses -
       Other", in the income statement.

(2) Net interest earned, divided by average interest-earning assets.

(3) Interest spread, nominal basis is the difference between the average nominal
    interest rate on interest-earning assets and the average nominal interest
    rate on interest-bearing deposits.

(4) Net interest margin and interest spread, presented on a real basis, when
    compared with the corresponding information presented on a nominal basis,
    reflect the gain or loss in purchasing power of the dollar caused by the
    difference between the pesos fluctuation and inflation in Argentina for each
    period.

                                      -63-
<PAGE>

RETURN ON EQUITY AND ASSETS

The following table presents certain selected financial information for Grupo
Galicia and Banco Galicia and ratios for the periods indicated.

<TABLE>
<CAPTION>
                                                                 GRUPO GALICIA                BANCO GALICIA
                                                 -----------------------------------------    -------------
                                                                                               FISCAL YEAR
                                                      FISCAL YEAR ENDED     6 MONTHS ENDED        ENDED
                                                 -----------------------------------------    -------------
                                                         DECEMBER 31,         DECEMBER 31,       JUNE,30
                                                 -----------------------------------------    -------------
                                                    2002            2001          2000             2000
-----------------------------------------------------------------------------------------------------------
                                                 (in millions of December 31, 2002, constant Pesos, except
                                                                             porcentages)
<S>                                              <C>             <C>          <C>             <C>
Net Income After the Loss Absorption ..........  Ps.(1,458.8)    Ps.  262.3   Ps.   196.4      Ps.   341.4
Net Income Before the Loss Absorption .........  Ps.(2,817.0)         262.3         196.4            341.4
Average Total Assets ..........................     29,245.9       31,691.1      33,141.1         30,501.9
Average Shareholders' Equity ..................      2,410.9        3,027.0       2,676.4          2,751.3
Shareholders' Equity at End of the Period .....      1,624.5        3,076.7       2,885.2          2,910.0
Net Income as a Percentage of:
    Average Total Assets (1) ..................        (5.90)%         0.90%         1.27%(*)         1.12%
    Average Shareholders' Equity (2) ..........       (60.51)          8.67         14.68(*)         12.41
Declared Cash Dividends .......................            -              -   Ps.   70.78      Ps.  212.98
Dividend Payout Ratio .........................            -              -         24.96%           62.38%
Average Shareholders' Equity as a Percentage of
   Average Total Assets .......................         8.24           9.55          8.08             9.02
Shareholders' Equity at the End of the Period
   as a Percentage of Average Total Assets ....         5.55           9.71          8.71             9.54
==========================================================================================================
</TABLE>

(*) Annualized

(1) Before the absorption allowed by Comm. "A" 3800, for FY 2002 this ratio was
    (10,55) %.

(2) Before the absorption allowed by Comm. "A" 3800, for FY 2002 this ratio was
    was (116,84) %.

GOVERNMENT AND CORPORATE SECURITIES

Until late 2001, through its subsidiaries, Grupo Galicia owned, managed and
traded a portfolio of government securities issued by the Argentine government,
the Uruguayan government and Treasury Bills issued by the United States federal
government. The Argentine government securities had the same ratings as that of
Argentina. See "Item 3. Key Information--Risk Factors."

Pursuant to Decree No.1387/01, on November 6, 2001, the Argentine government
launched the restructuring of Argentina's public-sector debt, both national and
provincial. This operation was structured in two tranches: the first tranche's
objective was the restructuring of the national and provincial governments debt
instruments held by local investors (such as the Bank and Sudamericana Holding
S.A.), including the loans granted by the financial system to the national and
provincial governments. The transaction was designed as a swap for promissory
notes issued by the national government and secured by tax collection, with no
quotation in the secondary markets (known as the secured loans). The swapped
instruments' maturity was extended by 3 years (for instruments maturing before
2010) and their currency of denomination was maintained (as of December 31,
2001, the public sector debt with domestic holders was mostly
dollar-denominated). The new coupon would be the lowest between a 30% discount
to the original coupon or an annual rate of 7% (for fixed-rate instruments in
origin) or LIBOR plus 300 basis points (for floating rate instruments in
origin).

The debt swap was carried out from in November and December 2001. Pursuant
thereto, the Bank and Sudamericana Holding S.A. tendered its eligible government
securities and the Bank its eligible portfolio of loans to the financial and
non-financial public sectors, in exchange for secured loans. As of December 31,
2001, the swap of loans made to the provincial public sector was pending
completion. As of that date, the Bank had recorded the provincial loans in
accordance with the characteristics of the new secured loans to be received.

                                      -64-

<PAGE>

In the first tranche and with respect to bonds, all national-government bonds
were eligible, issued either in pesos or in dollars, with the exception of
Treasury Bills (Letes), Par Bonds; Discount Bonds; zero-coupon Foreign Global
Bonds of series D, E and F (partially secured by the World Bank); Bonos del
Gobierno Nacional 9% con Vencimiento 2002 (National Government Bond at 9%
Maturing in 2002, used by local banks to comply with Argentine Central Bank's
minimum liquidity requirements); Letras Externas de la Republica Argentina
(Argentine Republic External Notes) in dollars series 74 and 75; and the
Certificados de Credito Fiscal (Tax Credit Certificates) issued under Decree
99/2001.

Decree No.471/02 of March 13, 2002, pesified obligations to give sums of money
of the public sector at the Ps.1.40 per US dollar exchange rate. This included
all debt instruments subject to Argentine Law (the only instrument excluded held
by the Bank were the Argentine Republic External Notes) and all secured loans,
both representing an exposure to the national and provincial public sectors.
secured loans principal became adjustable by the CER coefficient and their
interest rate was fixed in a range from 3% to 5.5% per annum. Subsequently, in
accordance with the provisions of Decree No.1579/02 of August 28, 2002, secured
loans corresponding to provincial governments underwent a new restructuring for
secured loans or Bonds with a 16-year maturity, principal adjutable by the CER
coefficient and a 2% annual interest rate. This swap was pending completion as
of the close of fiscal year 2002.

In addition, during 2002 and in accordance with the provisions of Decree
No.214/02, No.494/02, No.905/02 and No.2167/02, the latter published in the
Official Gazette on October 29, 2002, compensation to be provided to financial
institutions by the government for the negative effects of the "asymmetric
pesification" was determined. This compensation applied to the effects of the
"asymmetric pesification" on the balance sheets of the Bank's foreign branches
and subsidiaries but did not apply to its subsiadiaries with complementary
activity which were affected by the "asymmetric pesification" (the regional
credit-card companies, for example). The Bank was therefore entitled to receive
on a consolidated basis Ps.7,724.7 (as of December 31, 2002) in
dollar-denominated compensatory and hedge bonds, of which Ps.2,248.7 million (as
of December 31, 2002) corresponded to Galicia Uruguay. In accordance with the
above mentioned rules, these bonds are national-government dollar-denominated
bonds maturing in 2021 and bearing LIBOR. The Ps.687.5 million received as of
December 31, 2002, were recorded under the account "Government Securities." The
amount still to be received was recorded under the account "Other Receivables
from Financial Intermediation." See "Item 3. Key Information--Risk Factors--Risk
Factors Relating to the Bank--The Bank has recorded its Boden and its rights to
receive or acquire future Boden as assets having a value equal to the face
amount of the Boden received or to be received and acquired."

As of December 31, 2002, the Group's consolidated holdings of government and
(listed) corporate securities, amounted to Ps.1,814,0 million, of which Ps.2.5
million corresponded to net holdings of (listed) corporate securities. The
Ps.1,811.5 million of holdings of government securities included: (i)
public-sector debt instruments portfolios of the Group's subsidiaries that were
not eligible to be tendered in the late 2001 swap, that is Argentine Republic
External Notes and Fiscal Credit Certificates (the National Government Bond at
9% Maturing in 2002 was swapped by the Bank for Boden 2012 to be delivered to
depositors in exchange for restructured deposits) and (ii) the compensatory
bonds already received by the Bank as of December 31, 2002. Of the total
government and corporate securities holdings, Ps.1,778.9 million were held by
Banco Galicia, Ps.1.2 million by Galicia Uruguay, Ps.1.2 million by Sudamericana
Holding S.A, Ps.28.8 million by the regional credit-card companies, Ps. 0.2
million by GCM and Ps.1.2 Galicia Valores S.A. The government securities'
holdings of the regional credit-card companies were mainly investments in Lebac,
short-term Argentine Central Bank notes, and to a lesser extent bonds issued by
provincial governments, used as quasi-monies, that these companies receive in
payment from customers in their normal daily operations.

As of the date of this annual report, the Boden 2012 are current, while the
Argentine Republic External Notes are in payment default. The past due amounts
of these notes can be aplied to the payment of taxes. The Fiscal Credit
Certificates can be applied to the payment of taxes as well.

Grupo Galicia's investment and trading portfolio yields do not contain any tax
equivalency adjustments. In accordance with Argentine Central Bank rules,

    -    Quoted government securities held-for-trading purposes are carried at
         their Argentine closing market quotation less estimated selling costs.

                                      -65-

<PAGE>

    -    The compensatory and the hedge bonds are valued at their technical
         value, as provided for by Communique "A" 3785 of October 29, 2002 of
         the Argentine Central Bank.

    -    Communique "A" 3857 of January 7, 2003, of the Argentine Central Bank
         established that financial institutions could record as investments,
         only those securities incorporated to their balance sheets through
         December 31, 2002. After that date, any securities (except the
         compensatory and the hedge bonds received and to be received according
         to applicable compensation rules or other compensations to be received)
         incorporated into a bank's position will be valued at mark-to-market.

    -    Through Communique "A" 3278, the Argentine Central Bank established
         that effective June 1, 2001, quoted government securities in investment
         accounts had to be valued at their acquisition cost increased by
         accruing their internal rate of return over the period elapsed since
         the date of inclusion of the securities in the investment account
         category. This was also applicable to the securities incorporated in
         investments accounts previously to June 1, 2001. In this case, the
         acquisition cost shall be their book value as of May 31, 2001,
         resulting from the previous valuation rules. The change in valuation
         rules shall not be retroactive nor should it generate any accounting
         adjustments.

    -    Beginning March 1, 2000, quoted government securities classified as
         investments began to be carried at their acquisition cost increased at
         the end of each service period by the corresponding coupon rate.

    -    Until February 29, 2000, Banco Galicia carried quoted government
         securities classified as investments at their acquisition cost
         increased exponentially based on their internal rate of return and the
         time elapsed since their acquisition.

    -    Unquoted government securities are carried at the lower of cost or net
         realizable value plus any applicable contractual adjustments for
         movements in price indices, or at their technical values, which are
         government-published schedules of value that increase over the term of
         the security.

We also own, manage and trade a portfolio of corporate securities. Unquoted
corporate debt securities are carried at the residual value plus accrued
interest. Quoted corporate debt and equity securities are considered as held for
trading and, therefore, are carried at market value.

The following table shows Grupo Galicia's and Banco Galicia's holdings of
government and corporate securities at the balance sheets dates, and the
breakdown of the portfolio in accordance with the Argentine Central Bank
classification system and by the securities' currency of denomination. As of
December 31, 2002, the Group's holdings of government and corporate securities
were identical to its net position as the Group did not enter into any forward
purchases or sales and no spot transactions pending settlement were outstanding
as of that date.

                                      -66-

<PAGE>

<TABLE>
<CAPTION>
                                                                                          GRUPO GALICIA,
                                                                            ----------------------------------------
                                                                                        AS OF DECEMBER 31,
                                                                            ----------------------------------------
                                                                                2002          2001           2000
--------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES                                                           (in millions of December 31, 2002,
                                                                                         constant Pesos)
<S>                                                                         <C>             <C>            <C>
Pesos
    Trading..............................................................   Ps.     2.5     Ps.  27.5      Ps.  46.3
    Investments..........................................................             -             -              -
    Available for Sale...................................................             -             -              -
    Unlisted Securities..................................................         139.2             -              -
                                                                            ----------------------------------------
TOTAL GOVERNMENT SECURITIES IN PESOS.....................................   Ps.   141.7     Ps.  27.5      Ps.  46.3
Dollars
    Trading..............................................................       Ps. 4.8     Ps. 127.6      Ps. 112.5
    Investments..........................................................       1,658.5             -           10.0
    Available for Sale...................................................             -             -              -
    Unlisted Securities .................................................           6.1         115.8              -
                                                                            ----------------------------------------
TOTAL GOVERNMENT SECURITIES IN DOLLARS...................................   Ps. 1,669.4     Ps. 243.4      Ps. 122.5
                                                                            ----------------------------------------
TOTAL GOVERNMENT SECURITIES..............................................   Ps. 1,811.1     Ps. 270.9      Ps. 168.8

CORPORATE EQUITY SECURITIES (QUOTED)
    Pesos................................................................             -     Ps.   0.4      Ps.  12.9
    Dollars..............................................................             -          12.5              -
                                                                            ----------------------------------------
TOTAL CORPORATE EQUITY SECURITIES .......................................             -     Ps.  12.9      Ps.  12.9
                                                                            ----------------------------------------
TOTAL GOVERMENT AND CORPORATE EQUITY SECURITIES .........................   Ps. 1,811.1     Ps. 283.8      Ps. 181.7
MUTUAL FUNDS.............................................................             -          15.5            6.8
CORPORATE DEBT SECURITIES
    Pesos................................................................           0.2         205.8          309.3
    Dollars..............................................................           2.7             -              -
                                                                            ----------------------------------------
TOTAL CORPORATE DEBT SECURITIES..........................................   Ps.     2.9     Ps. 205.8      Ps. 309.3
                                                                            ----------------------------------------
TOTAL GOVERMENT AND CORPORATE SECURITIES ................................   Ps. 1,814.0     Ps. 489.6      Ps. 491.0
====================================================================================================================
</TABLE>

The following table analyzes the remaining maturity and weighted-average yield
of Grupo Galicia's holdings of investment and trading government and corporate
securities as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                          MATURITY YIELD
                               ----------------------------------------------------------------------------------------------------
                                                        MATURING     MATURING AFTER 1 YEAR     MATURING AFTER 5 YEAR    MATURING
                                                      WTHIN 1 YEAR     BUT WITHIN 5 YEARS     BUT WITHIN 10 YEARS    AFTER 10 YEARS
                               ----------------------------------------------------------------------------------------------------
                                TOTAL BOOK    BOOK                 BOOK                  BOOK                    BOOK
                                   VALUE      VALUE    YIELD (1)   VALUE     YIELD (1)   VALUE       YIELD (1)  VALUE  YIELD(1)
----------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>        <C>       <C>         <C>       <C>           <C>        <C>    <C>
GOVERNMENT SECURITIES
HELD  FOR TRADING AND
BROKERAGE PURPOSES (CARRIED
  AT MARKET VALUE)
  Pesos.....................   Ps.     2.5  Ps.  1.1      22.0%        1.4      40.6%          -          -         -       -
  Dollars                              4.8       1.4      17.2         1.8       2.2         1.6        1.4%        -       -
HELD FOR INVESTMENT (CARRIED
  AT AMORTIZED COST)
  Pesos.....................             -         -         -           -         -           -          -         -       -
  Dollars...................       1,658.5     582.6       6.0       646.2       4.2       429.7        1.4         -       -
UNLISTED SECURITIES
  Pesos.....................         139.2      86.5     30.07        52.7      42.2           -          -         -       -
  Dollars...................           6.1         -         -         2.2       1.3         3.9        1.3         -       -
TOTAL GOVERNMENT SECURITIES.    Ps.1,811.1  Ps.671.6       9.2%  Ps. 704.3       7.1%  Ps. 435.2        1.4%        -       -
CORPORATE DEBT SECURITIES...           2.9       0.6         -         2.3         -           -          -         -       -
MUTUAL FUNDS................             -         -         -           -         -           -          -         -       -
TOTAL PORTFOLIO.............    Ps.1,814.0  Ps.672.2       9.2%  Ps. 706.6       7.1%  Ps. 435.2        1.4%        -       -
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Effective yield based on December 31, 2002 quoted market values.

                                      -67-

<PAGE>

LOAN PORTFOLIO

The following table analyzes the loan portfolio by type of loan and total loans
with guarantees. Total loans reflect the loan portfolio including past due
principal amounts.

<TABLE>
<CAPTION>
                                                          AS OF DECEMBER 31,                      AS OF JUNE 30,
                                               -------------------------------------  --------------------------------------
                                                   2002         2001        2000         2000          1999         1998
----------------------------------------------------------------------------------------------------------------------------
                                                             (In millions of December 31, 2002, constant pesos)
<S>                                            <C>          <C>          <C>          <C>          <C>           <C>
Principal and Interest
Non-Financial Public Sector..................  Ps. 7,568.7  Ps. 8,594.8  Ps. 5,712.9  Ps. 5,469.1  Ps. 4,210.7   Ps. 2,616.9
Local Financial Sector.......................        133.6        189.2      1,111.7        789.0        931.7         761.5
Non-Financial Private Sector and Residents
  Abroad (1)
   Advances..................................        225.1        804.0        959.6      1,727.7      1,492.4       1,755.0
   Notes.....................................      1,530.9      3,855.3      4,905.8      5,362.1      4,725.6       4,176.4
   Mortgage Loans............................        856.5      3,269.8      3,474.3      2,966.0      2,756.7       2,720.5
   Pledge Loans..............................        189.9        834.6        868.3        851.1        897.1       1,261.1
   Personal Loans............................        118.9        578.3        805.0        721.7        668.2         605.1
   Credit-Cards Loans........................        579.9      1,859.1      1,652.7      1,432.5      1,220.2         604.6
   Placements in Correspondent Banks.........        156.9        374.2        763.9      1,218.9      1,665.2       1,875.3
   Other Loans...............................        249.5        194.2        269.5        177.2        260.6         550.7
   Accrued Interest, Adjustment and Quotation
     Differences Receivable..................        603.2        388.7        350.4        310.8        287.5         261.5
   Documented Interest.......................        (10.7)       (54.6)       (96.1)       (80.6)       (79.3)        (74.5)
                                               -------------------------------------  --------------------------------------
Total .......................................     12,202.4     20,887.6     20,778.0     20,945.5     19,036.6      17,114.1
Allowance for Loan Losses....................     (1,667.3)    (1,041.2)      (590.9)      (571.9)      (586.1)       (474.0)
                                               -------------------------------------  --------------------------------------
TOTAL LOANS..................................  Ps.10,535.1  Ps.19,846.4  Ps.20,187.1  Ps.20,373.6  Ps.18,450.5   Ps.16,640.1
----------------------------------------------------------------------------------------------------------------------------
Secured Loans
   With Preferred Guarantees (2).............  Ps. 9,200.3  Ps.13,274.1  Ps. 8,602.9  Ps. 9,049.4  Ps. 8,445.6   Ps. 6,828.3
   Other Guarantees..........................        518.5      1,675.2      2,173.5      1,991.1      2,093.1       2,084.8
                                               -------------------------------------   -------------------------------------
TOTAL SECURED LOANS..........................  Ps. 9,718.8  Ps.14,949.3  Ps.10,776.4  Ps.11,040.5  Ps.10,538.7   Ps. 8,913.1
============================================================================================================================
</TABLE>

(1) Categories of loans above include:

         - Advances: short-term obligations drawn on by customers through
         overdrafts. Also, prefinancing of exporters and other customers in
         connection with documents evidencing the future receipt of cash.

         - Notes: endorsed promissory notes, negotiable obligations and other
         promises to pay signed by one borrower or group of borrowers and
         factored loans. Includes tax receivables purchased from the Argentine
         government as part of the Argentine government's tax moratorium, which
         were canceled during the year ended June 30, 1998.

         - 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, were such collateral is an intgral part of the
         loan documents.

         - Personal loans: loans to individuals.

         - Credit Cards Loans: loans granted through credit cards to credit card
         holders.

         - Placements in correpondent banks: short-term loans to other banks and
         short-term loans from Banco Galicia Uruguay S.A. to major international
         banks outside of Uruguay.

         - Other loans: loans not included in other categories.

         - Documented interest-discount on notes and bills.

(2) Preferred guarantees include mortgages on real estate property or pledges on
    movable property, such as cars or machinery, where the Bank has the priority
    right, endorsements of the Federal Office of the Secretary of Finance,
    pledges of Argentine Goverment securities, or gold or cash collateral.

                                      -68-

<PAGE>

The Bank's loan portfolio before the allowance for loan losses amounted to
Ps.12,202.4 million as of December 31, 2002, 41.6% lower in real terms than at
the end of the previous fiscal year. This was the result of the restatement of
previous year's figures in constant currency of December 31, 2002, by using the
variation of the WPI in 2002, that is a 2.1844 coefficient. When compared in
nominal terms, the Bank's loan portfolio increased by 27.6%, mainly as a result
of the pesification of the portfolio of loans to the public sector at the
Ps.1.40 per US dollar exchange rate and the CER variation applied to their
principal. Excluding loans to the financial sector, that correspond to loans to
the financial public sector as of December 2002 that were not swapped for
secured loans, all types of loans to the private sector (most of which were
pesified at the Ps.1 per US dollar exchange rate and to which no principal
adjustment was applied by the Bank) fell significantly, both in constant and in
nominal terms. This was the result of: (i) the normal repayment of part of the
loan portfolio and a substantial prepayment by customers, (ii) a very low
origination; and (iii) the securitization or sale of private-sector loans Ps.
446 million in constant currency of December 2002 and Secured loans for Ps.130.2
million in constant currency of December 2002), when the Plan was launched.

During fiscal year 2002, the portfolio of loans to the private sector fell from
57.95% to 36.89% of total gross loans between December 31, 2001 and December 31,
2002, due, as explained above, to the different pesification treatment
determined by Government rules and by the fact that the private-sector portfolio
was subject to repayment and prepayment while practically no public-sector loans
amortized during 2002 given the characteristics of the late 2001 and the 2002
restructurings.

As of December 31, 2001, the Bank's loan portfolio before the allowance for loan
losses amounted to Ps.20,887.6 million, representing only an 0.5% increase from
December 31, 2000 levels. However, the composition of the loan portfolio
changed, as a result of the decrease in lending to the private sector and to the
financial sector, that was offset by an increase in lending to the public
sector. This increase was mainly due to the exchange of government securities
for secured loans carried out by the Government in late 2001.

CREDIT REVIEW PROCESS

The Bank's credit approval and credit risk analysis is a centralized process
based on the concept of "opposition of interests." This is achieved through the
existing division between the credit and the origination functions in both of
the Bank's retail and wholesale business groups, thus enabling the Bank to
achieve an ongoing and efficient control of asset quality, a proactive
management of problem loans, aggressive write-offs of uncollectible loans, and
an adequate loan loss provisioning. The process also includes credit-quality
monitoring of the borrower, as well as monitoring of problem loans and related
losses. The process facilitates early detection of situations that could entail
some degree of portfolio impairment and provides appropriate protection of the
Bank's assets.

Given the adverse effects of the Argentine recession, of the unprecedented
economic and political crisis of late 2001 and of the economic policy measures
taken by the Government beginning in December 2001 and during 2002, on
borrowers' ability to repay their debts, the Bank reorganized the former Credit
Division and the divisions that originate individual and corporate loans, in
order to adapt to the adverse scenario and optimize the quality of its credit
portfolio and the management of credit risk in such scenario.

In addition, as part of the changes made in the Bank's organizational structure,
in 2002 the Risk Management Division began to report to the Bank's Chief
Executive Officer and currently reports to the Board of Directors. In order to
achieve an integral approach to risk management, this Division's structure was
strengthened by the incorporation of sectors specializing in credit risk and in
financial risks, which were added to the existing structure, which included a
sector specialized in operational risk. This Division's mission is to assure
that the Bank's executive authorities are fully aware of all the risks to which
Banco Galicia might be exposed, and to design and provide the necessary policies
to achieve a proper global risk management. Therefore, the Risk Management
Division participates in several Board of Directors' Committees, and
specifically, in some of the processes carried out, with the purpose of
verifying compliance with the established policies.

                                      -69-

<PAGE>

Individual Portfolio

In the case of loans to individuals, the Bank assesses applications for
different types of loans including credit-card loans, current account loans and
personal loans with or whithout guarantees. Origination of mortgage loans was
discontinued during 2002, due to the prevailing economic situation described in
other sections of this annual report.

Applications for these types of loans are assessed through computerized
credit-scoring systems that take into account different variables to determine
the customer's profile and its repayment capacity. Analysis of the information
required from applicants and the credit approval or refusal decision is made in
a centralized manner and in accordance with the credit levels described under
"Commercial Portfolio". Applicants previous credit performance, both at Banco
Galicia or in the financial system as a whole, is verified through internal
information and information supplied by Organizacion Veraz S.A., a company that
provides credit information services.

As a result of the above mentioned reorganization, the former Consumer
Supervision and Recovery Department that reported to the former Credit Division,
which was dissolved, was incorporated into the Retail Banking Division under the
name "Retail Credit Department," reporting directly to the manager of said
Division.

The Retail Credit Department defines and approves credit policies for the retail
banking business, jointly with the origination sectors and the Risk Management
Division.

In addition, the Department supervises the classification of the loan portfolio,
in accordance with the Argentine Central Bank's applicable rules and the Bank's
own internal policy. It also coordinates the relation with the Bank's internal
auditor which supervises the portfolio classification, and with the independent
auditor. As described under "Argentine Banking Regulation--Loan Classification
and Loan Loss Provisions", classification of the retail loan portfolio is based
on the borrower's payment performance, pursuant to the rules set forth by the
Argentine Central Bank.

With respect to the recovery of past-due loans, the Department manages the
consumer loan portfolio from the early stages until the portfolio returns to a
normal status or the recovery procedures are abandoned for loans deemed
uncollectible. When a consumer loan is more than 3 days past due, recovery
procedures are undertaken through the Collection Center (a specialized area of
the Bank's Customer Contact Center) or through letters or visits to the
borrower's residence. A follow-up system that performs automated telephone calls
is also used for loans in early stages of delinquency. For a better coverage of
distant locations, the Department also coordinates actions with the branch
network staff. When these early procedures are exhausted, collection is turned
to collection agencies hired by the Bank to handle recovery through litigation
or out of court procedures, and the Retail Credit Department supervises the
process.

Banco Galicia does not classify, nor does it provide for recovery procedures of,
certain small balance loans, including credit card balances from membership fees
and other administrative costs charged to customers on unsolicited credit cards,
small residual balances from lending operations where the cost of recovery and
legal costs are prohibitive. These small balance loans are charged-off directly
to the income statement.

Commercial Portfolio

Prior to the approval of a loan, Banco Galicia's analysis involves the
evaluation and assessment of the corporate borrower and its financial status.
For credits above Ps.400,000, Banco Galicia makes a standard analysis of each
credit line and corporate borrower. For credits below Ps.400,000, Banco Galicia
uses automated systems of risk evaluation that provide financial and
non-financial information on the corporate borrower.

Banco Galicia bases the risk assessment on the following factors:

Qualitative analysis..........   assessment of the quality of the corporate
                                 borrower by the line officer to which the
                                 account is assigned on the basis of personal
                                 knowledge.

                                      -70-

<PAGE>

Economic and financial risk...   quantitative results obtained from analysis of
                                 the corporate borrower's financial statements.

Economic sector risk..........   measure of the general risk of the sector in
                                 which the corporate borrower operates (based on
                                 statistical information gathered from internal
                                 and external sources).

The departments in charge of the management of the commercial loan portfolio
risk now report to the Corporate Banking Division. This Division monitors the
credit risk of the commercial loan portfolio on a borrower-by-borrower basis and
carries out the related procedures. It also classifies the commercial loan
portfolio, defines loan-loss provisioning, and is also responsible for its
recovery.

The Internal Audit Division is in charge of overseeing the classification of the
loan portfolio, in accordance with regulations established by the Argentine
Central Bank.

The Corporate Banking Division's organizational structure is based on areas of
specialization with the overall objective of optimizing the monitoring and
control of credit risk, and consists of the following departments: Corporate
Recovery, Corporate Credit, Corporate Restructuring and Corporate Commercial.

The Corporate Commercial Department is responsible for origination, and for both
the planning and management of the various lines of business. The Corporate
Restructuring department was created in order to carry on the process of
restructuring certain commercial loans.

The primary responsibility of the Corporate Credit Department is to approve
loans to corporate customers whose credit limit does not exceed Ps.3.5 million.
The overall objective is to maintain high credit-quality standards in keeping
with the Bank's policies and procedures. Similarly, prior to presentations to
the credit committees of corporate borrowers whose credit limit exceeds Ps.3.5
million, the department prepares analyses and reports that assess the credit
risk involved. Moreover, this Department classifies the performing and
non-performing commercial portfolios, in accordance with the regulations set by
the Argentine Central Bank and with the Bank's own internal policies. It also
coordinates the Corporate Bankig Division's relations with the Argentine Central
Bank, the independent auditors, and the rating agencies. Moreover, it reviews
all those businesses whose total credit exceed Ps.1 million, in accordance with
a review schedule determined by the level of credit risk.

The Corporate Recovery Department is responsible for monitoring and controlling
past-due commercial portfolios and for recovery of the entire commercial
portfolio. It establishes procedures, acts proactively, and designs action plans
on a case-by-case basis to recover any amounts that exceed the credit limits
that are assigned to the different corporate customers. This department also
oversees recovery of problem loans in the corporate portfolio, managing them
efficiently and working to regularize the status of those customers that are
most attractive to the Bank. Furthermore, this department manages problem loans
for which recovery is being settled through litigation or out of court. This
department also manages and oversees lawsuits carried out in various
jurisdictions by outside law firms hired to handle these matters.

The Bank's Problem Loans Committee, which consists of the Manager of the
Corporate Banking Division and the managers of departments within the Division,
works to strengthen credit-risk management and monitoring of the loan portfolio.
The committee operates on a proactive basis, anticipating problems and analyzing
various strategies for handling corporate customers who show signs of credit
impairment.

All credit authorizations require at least two signatures, based on the approval
authority levels in effect. Credit approval is structured in six levels numbered
6 to 1, from the lowest level of debt to the highest. At level 1.B (amounts
between Ps.3.5 million and Ps. 15 million) decisions are taken at the Senior
Committee, and they require the signatures of a member of the Board of
Directors, the Manager of the Corporate Banking Division, and the Risk
Management Manager. For level 1.A (amounts exceeding Ps.15 million), the loan
must be signed by two members of the Board of Directors, the Manager of the
Corporate Banking Division, and the Risk Management Manager. For loans over
Ps.3.5 million, the approval of the Risk Management Division is required.

                                      -71-

<PAGE>

As a result of the Argentine economic situation and the measures taken by the
government in 2002 (mentioned in other sections of this annual report), the
Bank's commercial loan portfolio is currently under a restructuring process.
This process has not been completed yet.

<TABLE>
<CAPTION>
            APPROVAL AUTHORITY         NUMBER OF       TOTAL CREDIT          % OF
LEVEL      IN MILLIONS OF PESOS         ACCOUNTS   IN MILLIONS OF PESOS  TOTAL CREDIT
-------------------------------------------------------------------------------------
<S>   <C>                              <C>         <C>                   <C>
 1.A                  Over Ps. 15            43        Ps.  9,653.1         79.1%
 1.B                 Up to Ps. 15            80               574.4          4.7%
 2.1                Up to Ps. 3.5           220               346.0          2.8%
 2.2                Up to Ps. 0.8           616               273.4          2.2%
   3               Up to Ps. 0.25         1,167               180.1          1.5%
   4                Up to Ps. 0.1         2,967               210.2          1.7%
   5               Up to Ps. 0.05       423,198               965.2          8.0%
   6  First Signature for Level 5             -                   -            -
--------------------------------------------------------------------------------
                            TOTAL       428,291        Ps. 12,202.4        100.0%
================================================================================
</TABLE>

The Bank's information systems used provide both financial and non-financial
data about customers. They can also perform automated risk evaluations and
financial-statements projections, and have the capacity to generate automatic
warnings about situations that may indicate an increase in risk.

Policy for Requiring Collateral

Banco Galicia requires collateral for loans to provincial governments and banks,
mortgage loans and pledge loans. Loans to provincial governments and provincial
banks are collateralized by Argentine national government tax collections shared
with the provinces. Mortgage loans are collateralized by a mortgage on the
underlying property and pledge loans, which principally consist of car and
machinery loans, are collateralized by the underlying asset.

The credit review process of Banco Galicia is unaffected by the collateral
underlying the loan. The Bank's credit review process and the Argentine Central
Bank's loan classification system is based on a borrower's capacity to repay or
on the past due status of the loan rather than on the structure of the loan.
However, once a loan is classified, the level of the reserve that should be made
against the loan is determined by whether the loan is secured or unsecured.

Although the procedures for assessing a borrower's credit worthiness are
unaffected by the collateral of the loan, Banco Galicia performs additional
procedures to review the existence and valuation of the collateral on all major
loans on an annual basis. For non-performing commercial loans, this review is
performed every six months. Banco Galicia reviews the existence and valuation of
collateral on consumer loans on a sample basis.

LOANS BY TYPE OF BORROWER

The following table analyzes the breakdown of Banco Galicia's total loan
portfolio, by type of borrower at December 31, 2002, 2001 and 2000, and June 30,
2000.

                                      -72-

<PAGE>

<TABLE>
<CAPTION>
                                                           AS OF DECEMBER 31,                               AS OF JUNE 30,
                                   ------------------------------------------------------------------   --------------------
                                            2002                   2001                2000                     2000
                                   ------------------------------------------------------------------   --------------------
                                                  % OF                    % OF                  % OF                  % OF
                                      AMOUNT     TOTAL      AMOUNT       TOTAL      AMOUNT      TOTAL      AMOUNT     TOTAL
----------------------------------------------------------------------------------------------------------------------------
                                                  (In millions of December 31, 2002, constant pesos)
<S>                                <C>          <C>       <C>           <C>       <C>          <C>      <C>           <C>
  Corporate.....................   Ps. 2,112.4   17.31%   Ps. 2,705.0    12.95%   Ps. 3,358.1   16.16%  Ps. 4,443.7    21.22%
  Middle-Market Companies ......         882.4    7.23        3,102.7    14.85        3,987.7   19.19       3,901.4    18.62
Commercial Loans................       2,994.8   24.54        5,807.7    27.80        7,345.8   35.35       8,345.1    39.84
Individuals.....................   Ps. 1,041.1    8.53%   Ps. 4,427.4    21.20%   Ps. 4,608.9   22.18%  Ps. 4,089.7    19.53%
Financial Sector (1)............         133.6    1.09          652.9     3.13        2,000.3    9.63       1,964.2     9.38
Non Financial Public Sector.....       7,568.7   62.03        8,594.8    41.15        5,712.9   27.50       5,469.1    26.11
Other Loans.....................         464.2    3.81        1,404.8     6.72        1,110.1    5.34       1,077.4     5.14
                                   ------------------------------------------------------------------   --------------------
TOTAL (2).......................   Ps.12,202.4  100.00%   Ps.20,887.6   100.00%   Ps.20,778.0  100.00%  Ps.20,945.5   100.00%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes local and international financial sector. Financial Sector loans
    are primarily composed by interbank loans(call money loans), overnight
    deposit at international money center banks and loans to provincial banks.

(2) Before the allowance for loan losses.

LOANS BY ECONOMIC ACTIVITY

The following table sets forth at the dates indicated an analysis of Banco
Galicia's loan portfolio according to the borrowers' main economic activity.
Figures include principal and interest.

<TABLE>
<CAPTION>
                                                                AS OF DECEMBER 31,                           AS OF JUNE 30,
                                      ----------------------------------------------------------------   --------------------
                                              2002                 2001                   2000                   2000
                                      ----------------------------------------------------------------   --------------------
                                                     % OF                  % OF                  % OF                   % OF
                                         AMOUNT      TOTAL      AMOUNT     TOTAL      AMOUNT     TOTAL      AMOUNT     TOTAL
-----------------------------------------------------------------------------------------------------------------------------
                                                          (In millions of December 31, 2002, constant pesos)
<S>                                   <C>           <C>      <C>          <C>      <C>          <C>      <C>           <C>
Financial Sector...................   Ps.   133.6     1.09%  Ps.   652.9    3.13%  Ps. 2,000.3    9.63%  Ps. 1,964.2     9.38%
Services
  Non-Financial Government Sector..       7,568.7    62.03       8,594.8   41.15       5,712.9   27.49       5,469.1    26.11
  Comunic., Transportation Health
   and Others                               331.2     2.71         589.4    2.82         728.3    3.51         825.5     3.94
  Electricity, Gas, Water Supply and
   Sewage Services.................         233.8     1.92         341.4    1.63         445.2    2.14         587.8     2.81
  Other Financial Services.........         580.6     4.76         395.8    1.90         827.0    3.98         654.5     3.12
                                      ----------------------------------------------------------------   --------------------
   Total...........................   Ps. 8,714.3    71.42%  Ps. 9,921.4   47.50%  Ps. 7,713.4   37.12%  Ps. 7,536.9    35.98%
Primary Products
  Agriculture and Livestock........   Ps.  460.5      3.77%  Ps. 1,358.3    6.50%  Ps. 1,514.9    7.29%  Ps. 1,468.6     7.01%
  Fishing, Forestry and Mining.....          90.3     0.74          93.9    0.45         148.5    0.72         299.7     1.43
                                      ----------------------------------------------------------------   --------------------
   Total...........................   Ps.   550.8     4.51%  Ps. 1,452.2    6.95%  Ps. 1,663.4    8.01%  Ps. 1,768.3     8.44%
Consumer...........................       1,096.8     8.99       4,427.4   21.20       4,608.9   22.18       4,082.5    19.49
Retail Trade.......................         274.0     2.25         627.8    3.01         879.2    4.23         986.9     4.71
Wholesale Trade....................          67.0     0.55         244.9    1.17         340.3    1.64         395.2     1.89
Construction.......................         508.6     4.17         907.4    4.34       1,091.6    5.25       1,054.9     5.04
Manufacturing
  Foodstuffs.......................   Ps.   203.2     1.67%  Ps.   480.6   2.30%   Ps.   559.9    2.70%  Ps.   851.7     4.07%
  Transportation Materials.........          27.7     0.23          91.5    0.44         143.7    0.69         201.2     0.96
  Chemicals and Oil................         109.6     0.90         283.8    1.36         279.4    1.34         380.5     1.82
  Manufacturing Industries.........         388.5     3.17         790.5    3.78         860.4    4.14       1,039.6     4.96
                                      ----------------------------------------------------------------   --------------------
   Total...........................         729.0     5.97       1,646.4    7.88       1,843.4    8.87       2,473.0    11.81
Other Loans (1)....................         128.3     1.05       1,007.2    4.82         637.5    3.07         683.6     3.26
                                      ----------------------------------------------------------------   --------------------
  TOTAL (2)........................   Ps.12,202.4   100.00%  Ps.20,887.6  100.00%  Ps.20,778.0  100.00%  Ps.20,945.5   100.00%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) "Other loans" is an Argentine Central Bank classification that primarily
    includes loans in judicial proceedings.

(2) Before the allowance for loan losses.

                                      -73-

<PAGE>

In the table above, the loans that are identified as consumer loans are
classified as consumer loans for purposes of the Argentine Central Bank
classification and provisioning system. All of the other loans represent
commercial loans for the purpose of the Argentine Central Bank's classification
and provisioning system. See "--Interest Rate Sensitivity of Outstanding Loans
as of December 31, 2002--Argentine Central Bank's Loan Classification and Loan
Loss Provisions."

MATURITY COMPOSITION OF THE LOAN PORTFOLIO

The following table sets forth an analysis by type of loan and time remaining to
maturity of Banco Galicia's loan portfolio before deducting the allowance for
loan losses at December 31, 2002.

<TABLE>
<CAPTION>
                                                            AFTER 6
                                                 AFTER 1     MONTHS     AFTER 1     AFTER 3
                                                MONTH BUT     BUT       YEAR BUT   YEARS BUT                TOTAL AT
                                    WITHIN 1     WITHIN 6  WITHIN 12    WITHIN 3    WITHIN 5    AFTER 5     DECEMBER
                                     MONTH        MONTHS     MONTHS      YEARS       YEARS       YEARS      31, 2002
----------------------------------------------------------------------------------------------------------------------
                                                    (In millions of December 31, 2002, constant pesos)
<S>                               <C>           <C>        <C>         <C>         <C>        <C>          <C>
Nonfinancial Public Sector (1)..  Ps. 2,200.6           -          -   Ps. 113.2   Ps. 264.0  Ps. 5,045.8  Ps. 7,623.6
Financial Sector (1)............         65.9   Ps.   6.3  Ps.   7.5        30.1        23.8            -        133.6
Private Sector and Residents
Abroad..........................      2,654.4       485.3      210.8       488.7       261.3        399.4      4,499.9
   - Advances...................        202.8        22.2          -           -           -            -        225.0
   - Promisory Notes............        687.0       357.7       90.4       192.7       104.8         98.3      1,530.9
   - Mortgages Loans............         80.8        56.1       68.8       210.4       139.3        301.1        856.5
   - Pledge Loans...............         67.9        15.7       24.9        64.3        17.1            -        189.9
   - Personal Loans.............         37.2        33.6       26.7        21.3         0.1            -        118.9
   - Credit-Cards Loans.........        579.9           -          -           -           -            -        579.9
   - Other Loans................        408.5           -          -           -           -            -        408.5
   - Accrued Interest and
      Quotation Differences
      Receivable (1)                    603.2           -          -           -           -            -        603.2
   - (Documented Interest)......        (10.7)          -          -           -           -            -        (10.7)
   - (Unallocated Collections)..         (2.2)          -          -           -           -            -         (2.2)
Allowance for Loan Losses (2)...     (1,667.3)                                                                (1,667.3)

TOTAL LOANS, NET................  Ps. 3,253.6   Ps. 491.6  Ps. 218.3   Ps. 632.0   Ps. 549.1  Ps. 5,445.2  Ps.10,589.8
======================================================================================================================
</TABLE>

(1) Interests and CER adjustement were assigned to the first month.

(2) The allowances were assigned to the first month like past due loans and
    loans in judicial proceedings.

In the table above, consumer loans as classified by the Argentine Central Bank
consist of personal loans, credit card loans, as well as certain portions of
advances, mortgage loans and pledge loans. See "--Interest Rate Sensitivity of
Outstanding Loans as of December 31, 2002--Argentine Central Bank's Loan
Classification and Loan Loss Provisions."

                                      -74-

<PAGE>

INTEREST RATE SENSITIVITY OF OUTSTANDING LOANS AS OF DECEMBER 31, 2002

The following table presents the interest rate sensitivity of Banco Galicia's
outstanding loans as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                                    (in millions of
                                                                                    December 31, 2002,      As a % of
                                                                                     constant pesos)        Total Loans
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                     <C>
Variable Rate (1)(2)
       Pesos.............................................................              Ps. 7,207.7             76.88%
       Dollars...........................................................                    491.1              5.23
                                                                                       -----------------------------
    TOTAL................................................................              Ps. 7,698.8             82.11%
Fixed Rate (2)(3)
       Pesos.............................................................              Ps. 1,057.5             11.28%
       Dollars...........................................................                    619.4              6.61
                                                                                       -----------------------------
    TOTAL................................................................              Ps. 1,676.9             17.89%
Past Due Loans
       Pesos.............................................................              Ps. 1,315.2             14.03%
       Dollars...........................................................                      8.0              0.08
                                                                                       -----------------------------
    TOTAL................................................................              Ps. 1,323.2             14.11%
====================================================================================================================
</TABLE>

(1) Includes overdraft loans.

(2) Includes past due loans and excludes interest receivable, differences in
quotations and the CER adjustement.

(3) Includes short-term and long-term loans whose rates are determined at the
beginning of the loans' life.

ARGENTINE CENTRAL BANK'S LOAN CLASSIFICATION AND LOAN LOSS PROVISIONS

General

The Argentine Central Bank's loan classification system is a bifurcated system,
that applies certain criteria to classify loans in a bank's consumer portfolio,
and another set of criteria to classify loans in its commercial portfolio. The
classification system is independent of the currency in which the loan was
denominated, since the dual currency system was part of Argentine federal law.
Subsequent to December 31, 2001, the economic policy measures taken by the
government provided for the "pesification" of most loans denominated in foreign
currency outstanding as of December 31, 2001. See "--Main Regulatory Changes in
2002 and 2003."

The loan classification criteria applied to loans in the consumer portfolio are
based mainly on delinquency aging. For the purposes of the Argentine Central
Bank, consumer loans are defined as residential mortgage loans, personal loans,
pledge loans, credit-card loans and other types of installment credits to
individuals. All other loans are considered as commercial loans. In addition, as
permitted by the Argentine Central Bank, the Bank classifies as consumer loans
all commercial loans that are for an amount less than Ps.200,000 for purposes of
applying the Argentine Central Bank's provisioning requirements. As a result,
the Bank classifies such loans based on the delinquency aging system rather than
on the borrower's ability to repay.

The principal criterion of classification of loans in the commercial portfolio
is each borrower's ability to pay, as measured principally by such borrower's
future cash flow. In this loan classification system, all customers in an
economic group (all corporate and financial entities, both domestic and foreign,
which are controlled, directly or indirectly, by a customer) are considered as
one borrower. For example, if one or more loans in a group of loans to an
economic group becomes classified, all loans to that group are reclassified in
the most severe classification. Banks may opt to apply the consumer loan
classification criteria to commercial loans of up to Ps.200,000. If a customer
has both commercial and consumer loans, consumer loans will be added to
commercial loans to determine eligibility for classification in the consumer
portfolio.

Interbank transactions of less than 30 days in maturity, as well as loans to
provincial governments or to financial institutions majority-owned by the
Argentine national, provincial or city governments with governmental guarantees,
are excluded from this procedure.

                                      -75-

<PAGE>

Loans backed with preferred guarantees are considered at 50.0% of their face
value.

In applying the Argentine Central Bank's classifications to commercial loans, a
bank must assess the following factors:

-   management and operating history of the borrower;

-   present and projected financial situation of the borrower with a review of
    the borrower's financial statements;

-   borrower's payment history and ability to service debt;

-   capability of the borrower's internal information and control systems to
    provide accurate and timely financial information; and

-   general risk of the sector in which the borrower operates and its relative
    position within that sector.

Argentine Central Bank rules establish that periodic evaluations of the
commercial portfolio must be performed by an evaluation team independent from
the officers that originate the loans. Alternatively, if such officers carry out
these evaluations, they must be subject to independent supervision. The Retail
Credit Department of the Retail Banking Division and the Corporate Credit
Department of the Wholesale Banking Division are responsible for these
evaluations, being independent from the business units that originate loans.

The frequency of the evaluation of each borrower depends on the Bank's exposure
to such borrower. The Argentine Central Bank requires that the larger the
exposure, the more frequent the review. A review is conducted every calendar
quarter when credit exposure to that borrower is equal to or in excess of 5.0%
of the Bank's Regulatory Capital on the last day of the month prior to the
review. Alternatively, a review is conducted every six months when exposure
amounts to the lesser of Ps.1,000,000 or 1.0% of the Bank's Regulatory Capital
on the last day of the month prior to review. In any case, at least 50.0% of the
commercial portfolio must be reviewed by the end of each six months, and all
other borrowers in the commercial portfolio must be reviewed during the fiscal
year, so that the entire commercial portfolio is reviewed every fiscal year.

Reviews must be reevaluated and documented in a borrower's file upon a negative
change in objective criteria such as an increase in days past due, filing for
bankruptcy or protection from creditors, or a judicial proceeding initiated
against a borrower. In addition, a reevaluation is triggered when, based on
information made available by the Argentine Central Bank, any other financial
institution holding at least 10.0% of a borrower's total outstanding credit
downgrades its classification of that borrower, or when an independent rating
agency downgrades the rating it grants to a borrower's debt securities.

The Argentine Central Bank permits only one level of discrepancy between the
classification that the Bank assigns and the lowest classification assigned by
at least two other banks whose combined credit to the borrower represents 20.0%
or more of the total credit of the borrower within the financial system,
considering all banks. Information on each bank's classification of its
borrowers is released by the Argentine Central Bank to all banks on a monthly
basis. If a bank's classification differs by greater than one level from the
lowest such classification, it must immediately downgrade its classification of
the borrower to the same classification, or within one classification level.

Loan Classification

The following tables set forth the Argentine Central Bank's six loan
classifications corresponding to levels of risk. Banco Galicia's total exposure
to a private sector customer must be classified in the riskiest classification
that corresponds to any part of such exposure.

<TABLE>
<CAPTION>
           Loan Classification                                                 Description
           -------------------                                                 -----------
<S>                                          <C>
                                             (A) COMMERCIAL PORTFOLIO

1. Normal..................................  Borrower can easily service all financial obligations; shows strong cash flow,
                                             liquid current financial situation, adequate financial structure, punctual
                                             payment record, capable management, timely and precise available information and
</TABLE>

                                      -76-

<PAGE>

<TABLE>
<S>                                          <C>
                                             satisfactory internal controls. Borrower is determined to be in the top 50.0% of
                                             an industry that is performing well and has a good outlook.

2. With Special Follow-up..................  Cash flow analysis indicates debt can be serviced, with the possibility that if
                                             not closely observed, future payment capacity could be impaired.

                                             This category is divided into two subcategories:

                                             (2.a). Under observation;

                                             (2.b). Under negotiation or under agreements to refinance.

3. With Problems...........................  Cash flow analysis evidences problems in normal servicing of existing debt, such
                                             that if the problems are not solved, they may result in some loss.

4. High Risk of Insolvency.................  Cash flow analysis demonstrates that full repayment of the borrower's obligations
                                             is highly improbable.

5. Uncollectible...........................  Debts in this category are considered total losses. Although these assets could
                                             have a possibility of recovery under certain future circumstances, lack of
                                             collectibility is evident as of the date of analysis. Includes loans to insolvent
                                             or bankrupt borrowers.

6. Uncollectible due to Technical Reasons..  Loans to borrowers indicated by the Argentine Central Bank to be in arrears to
                                             any liquidated or bankrupt financial entity. Also includes loans to foreign banks
                                             and other financial institutions which are not:

                                             (i)  classified as "normal",

                                             (ii) subject to the supervision of the Argentine Central Bank or other similar
                                                  authority of the country of origin, and

                                             (iii) classified as "investment grade" by any of the rating agencies admitted to
                                                  the Argentine Central Bank pursuant to Communique "A" 2269.

                                             (B) CONSUMER PORTFOLIO

1. Normal Performance......................  Loans that are up to 31 days past due on principal and/or interest, including
                                             loans that are current.

2. Inadequate Performance..................  Debt payment is occasionally delinquent, with arrears from 32 to 90 days.

3. Deficient Performance...................  Debt is in arrears at least 91 days and up to 180 days.

4. Difficult Collection....................  Judicial proceedings demanding payment have been initiated against the borrower,
                                             or the borrower is delinquent
</TABLE>

                                      -77-

<PAGE>

<TABLE>
<S>                                          <C>
                                             with arrears greater than 180 days and up to one year past due.

5. Uncollectible...........................  Loans to insolvent or bankrupt borrowers, or borrowers subject to judicial
                                             proceedings, with little or no possibility of collection, or in arrears in excess
                                             of one year.

6. Uncollectible due to Technical Reasons..  Loans to borrowers who fall within the conditions described above under
                                             Commercial Portfolio--Uncollectible due to Technical Reasons.
</TABLE>

In November 2001, the Argentine government established a system to allow certain
customers to pay off their debts through national government securities. As a
precondition, the customer must have obtained a certificate issued by the
Federal Public Revenue Authority (AFIP), stating that no tax debt was
outstanding as of September 30, 2001. On December 14, 2001, the Argentine
Central Bank established the procedures to be followed in order for borrowers
classified in categories 1, 2 or 3, with the previous agreement of the creditor
bank, and in categories 4, 5 or 6, at the borrower's request, to repay their
debts with government securities. The Argentine Central Bank's regulations
established that the term to repay loans using government securities ended in
May 2002.

Argentine Central Bank Communiques "A" 3418 issued on January 3, 2002, allowed
for increased flexibility of the rules for classification of borrowers for
December 2001 and January 2002, by temporarily extending the late-payment period
admitted for borrowers in categories 1 and 2 by 31 additional days, both for the
commercial and consumer portfolios. On February 7, 2002, through its Communique
"A" 3463, the Argentine Central Bank further extended the late-payment periods
established by Communique "A" 3418 by 31 additional days. No additional
extension was provided.

LOAN LOSS PROVISION REQUIREMENTS

         Allocated Provisions

The minimum loan loss provisions required by the Argentine Central Bank relate
to the above loan classification and are described in the following table, where
the percentages are applicable to the borrower's total credit outstanding,
including contingencies.

<TABLE>
<CAPTION>
                                                                      WITH SELF-          WITH            WITHOUT
                                                                     LIQUIDATING          OTHER          PREFERRED
                                                                      PREFERRED         PREFERRED       GUARANTEES
LOAN CLASSIFICATION                                                   GUARANTEES       GUARANTEES       OR SECURITY
-------------------                                                  -----------       ----------       -----------
<S>                                                                  <C>               <C>              <C>
"With Special Follow Up" and "Inadequate Performance"..........
    "Inadequate Performance - Under Observation"...............             1                3                5
     "Inadequate Performance - Under Negotiation or
         Agreement to Refinance"...............................             1                6               12
"With Problems" and "Defective Fulfillment"....................             1               12               25
"High Risk of Insolvency" and "Difficulty in Recovery".........             1               25               50
"Uncollectible"................................................             1               50              100
"Uncollectible Due to Technical Reasons".......................           100              100              100
</TABLE>

Banks are required to cease the accrual of interest or to establish provisions
of 100% of the interest accrued on loans to borrowers classified as "with
problems", "defective fulfillment" or under higher risk categories.

Pursuant to Argentine Central Bank regulation, these minimum provisions are not
required for interbank financial transactions of less than thirty days, or loans
to provincial governments or to financial institutions majority-owned by the
Argentine national, provincial or city governments with governmental guarantees.

                                      -78-

<PAGE>

         General Provisions

In addition to the specific loan loss allowances described above, the Argentine
Central Bank established in November 1992 a mandatory general allowance
requirement of 1.0% for all loans in its "normal" and "normal performance"
categories which was fully implemented on January 1, 1996. This general
allowance is not required for interbank financial transactions of less than
thirty days, or loans to provincial governments or to financial institutions
majority-owned by the Argentine national, provincial or city governments with
governmental guarantees.

As of December 31, 2001, Banco Galicia maintained a general loan loss allowance
of Ps.440.9 million, which exceeded by Ps.331.6 million the 1% general allowance
minimum requirement for the "normal" and "normal performance" loan portfolio
established by the Argentine Central Bank's rules. This general allowance is
determined based on the Bank's judgment of the entire loan portfolio risk at
each reporting period. The excess over the minimum requirement reflects the fact
that the Argentine economic and political crisis of late 2001 had just begun to
unfold as of December 31, 2001, the balance sheet date. Therefore, given that
the crisis had reached unprecedented levels and in the unprecedented context of
uncertainty prevailing at the time, the risk that loans that were impaired had
not been identified as impaired as of the balance sheet date was much higher
than in previous years.

As of December 31, 2002, Banco Galicia maintained a general loan loss allowance
of Ps.815.2 million, which exceeded by Ps.780.2 million the 1% general allowance
minimum requirement for the "normal" and "normal performance" loan portfolio
established by the Argentine Central Bank's rules. As explained in the paragraph
above, this general allowance is determined based on the Bank's judgment of the
entire loan portfolio risk at each reporting period. Therefore, the excess over
the minimum requirement reflects the judgment that the consequences of the
Argentine economic and political crisis of late 2001and 2002 on the loan
portfolio had not unfolded completely as of the balance sheet date and that the
risk that loans that were impaired had not been identified as impaired as of the
balance sheet date was still high. In addition, as the restructuring process in
the Bank's commercial portfolio begun only in the second half of the 2002,
uncertainty about the outcome of the process was still high. See "Item 3. Key
Information--Risk Factors", "Item 5. Operating and Financial Review and
Prospects--Results of Operations of Grupo Galicia for the Twelve Months Ended
December 31, 2001 and the Six Months Ended December 31, 2000--Provisions for
Losses on Loans and Other Receivables" and "Item 8. Financial
Information--Recent Events in Argentina and the Impact on Grupo Galicia."

CHARGE-OFFS

Banco Galicia's Retail Credit and Corporate Credit Departments are responsible
for determining the amounts of charge-offs to be made upon reviewing the loans
that are classified as "uncollectible". These Departments recommend to the Board
of Directors the amounts of charge-offs to be made and the Board of Directors
makes the respective decision. The Board of Directors is responsible for
authorizing the write off of debts against the allowance for loan losses in
periods shorter than the period established by the Argentine Central Bank: seven
months after the loan becomes 100% provisioned. The Bank writes debts off after
three months.

If Banco Galicia decides to charge-off against its allowance, it notifies
Organizacion Veraz S.A. in order for such information to be included in the
Veraz system and it notifies the Argentine Central Bank. Banco Galicia considers
information gathered by Veraz S.A. in making charge-off decisions. Charge-offs
are usually effected in the case of (i) customers against whom legal or out of
court action has been initiated in order to recover the debt and that are
classified as "Uncollectible" in accordance with the Argentine Central Bank's
classification system and therefore 100% provisioned.

In all cases, Banco Galicia informs the Argentine Central Bank that these
customers belong in the "uncollectible" category.

The following table sets forth the allocation of the main charge-offs made by
Banco Galicia during the years ended December 31, 2002 and 2001, the six-month
period ended December 31, 2000 and the fiscal year ended June 30, 2000 among the
various loan categories:

                                      -79-

<PAGE>

<TABLE>
<CAPTION>
                                                                FISCAL YEAR ENDED    6 MONTHS ENDED    FISCAL YEAR ENDED
                                                        -------------------------------------------    -----------------
                                                                     DECEMBER 31,      DECEMBER 31,          JUNE 30,
                                                        -------------------------------------------    -----------------
                                                           2002          2001              2000                2000
-------------------------------------------------------------------------------------------------------------------------
                                                          (in millions of December 31, 2002 constant Pesos)
<S>                                                     <C>           <C>               <C>            <C>
CHARGE-OFFS BY TYPE
Advances.....................................           Ps.  48.2     Ps.  58.5         Ps.  11.4           Ps.  24.7
Notes
   Promissory Notes .........................                14.8          19.9              31.2                34.5
   Discounted and Purchased Bills............                 0.0          20.5               3.5                 2.4
Documentary Credits                                                                           0.7                   -
   Mortgage Loans............................                18.3          16.4              35.4                35.2
   Pladge Loans..............................                18.9          40.6              29.3                 6.8
   Personal Loans............................                33.4         107.9              54.0               126.9
Credit-Card Loans
   Banco Galicia.............................                21.9          49.8              25.3               144.0
   Regional Credit-Card Companies............                88.5         146.6              39.0               161.0
Other Loans .................................                 5.7           1.5                 -                 1.2
Adjustement and Restatement..................                31.3             -                 -                   -
Other........................................                   -             -                 -                   -
                                                        -----------------------------------------           ---------
TOTAL........................................           Ps. 281.0(*)  Ps. 461.7         Ps. 229.8           Ps. 536.7
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Does not include Ps.22.1 million corresponding to Banco Galicia Uruguay S.A.

The overall level of charge offs for the year ended December 31, 2002, reflects
the effects on the Bank's loan portfolio quality of the outbreak of the
unprecedented Argentine economic and political crisis in late 2001 and of the
perpetuation of a crisis environment during 2002. It also reflects the effects
of the Government measures aimed at restructuring private-sector loan
portfolios. When comparing the 2002 figures in the table above with the previous
periods' figures, it should be taken into account that previous year's data was
restated in constant currency of December 31, 2002, by using the variation of
the WPI in 2002, that is using a coefficient of 2.1844. The fall in the overall
level of charge offs in real terms is mainly due to this restatement. When
compared in nominal terms, the overall level of charge offs in 2002 was 33%
higher than in 2001. By type of loan, and when compared in nominal terms,
increases can be observed in charge offs of promissory notes, mortgages and the
regional credit-card companies portfolios. The increases in promissory notes and
mortgage portfolios mainly reflect the fact that the 2002 economic crisis
significantly affected businesses, including several large businesses. The
increase in the charge offs in the regional credit-card portfolio continued to
show that the lower-income segment of the population was more than
proportionally affected by the effects of the crisis (increase in unemployment
and decrease in the purchasing power of income).

The overall level of charge offs for the year ended December 31, 2001, reflects
the deepening during 2001 of the recession that began in Argentina in the second
half of 1998. The overall level of charge-offs remained mostly unchanged when
compared to the annualized level of charge-offs made during the the six-month
period ended December 30, 2000. However, charge-offs by type of loan for the
year ended December 31, 2001, showed certain variations when compared to the
annualized amounts of the six-month period ended December 30, 2000, mostly due
to the dynamics of the long and deep economic recession. Higher charge offs of
advances reflect the fact that during 2001, the adverse effects of the
persistent economic recession extended into the medium and large corporate
sector more intensely than in previous periods, with businesses being the main
recipients of this type of unsecured loans. Charge-offs on notes and mortgage
and pledge loans decreased indicating a slower deterioration of the credit
quality of this type of secured loans. Charge offs on personal loans and
credit-card loans related to credit cards managed by the Bank itself remained
unchanged. Charge-offs on credit-card loans granted by the regional credit-card
companies increased significantly reflecting the fact that the customer segment
of these companies, the lower end of the consumer segment of the interior of
Argentina, was one of most affected by the deepening of the recesion.

The level of charge-offs for the six-month period ended December 31, 2000
indicates a decreasing trend, when compared to the charge-offs made during the
year ended June 30, 2000. Rather than indicating an improvement in credit
quality this resulted from the fact that the year ended June 30, 2000 includes
non-recurring charge offs from

                                      -80-

<PAGE>

both the Bank's and the regional credit-card companies' portfolios. This
decreasing trend was mitigated by the increasing trend in charge offs from
promissory notes, mortgage loans and pledge loans. The overall level of
charge-offs reflects the recessionnary environment that affected Argentina since
the second half of 1998.

CLASSIFICATION OF THE LOAN PORTFOLIO BASED ON ARGENTINE CENTRAL BANK REGULATIONS

The following tables set forth the amounts of Banco Galicia's loans past due and
the amounts not yet due of the loan portfolio, applying the Argentine Central
Bank's loan classification criteria in effect at the dates indicated below.

Non-accrual loans correspond to those loans classified under the last four
categories of the classification.

For December 31, 2001, the Bank applied the 30-day flexibility for the
classification of borrowers in categories 1 and 2 which was allowed by Argentine
Central Bank Communique "A" 3418, only to the classification of the Bank's
portfolio that is automatically classified according to the delinquency aging
system (consumer loans and all commercial loans that are for an amount of less
than Ps.200,000). Commercial loans continued to be classified according to the
borrower's ability to repay. As a consequence, the classification of consumer
loans in the categories 1, 2, and 3 of the classification of the loan portfolio
as of December 31, 2001 followed a different criterion than in previous periods.
In December 31, 2002, the previous years' end criteria (excluding December 2001)
was again applicable.

Loans classified as category "2.b" pursuant to the Argentine Central Bank's
classification, which correspond to loans under a restructuring process but that
do not constitute non-performing portfolios, amounted to Ps.460.8 million as of
December 31, 2002. In the case of the Bank, this portfolio consisted of
commercial loans only.

<TABLE>
<CAPTION>
                                                                            AS OF DECEMBER 31, 2002
                                                      ---------------------------------------------------------------------
                                                       AMOUNTS NOT YET DUE(1)    AMOUNTS PAST DUE        TOTAL LOANS
---------------------------------------------------------------------------------------------------------------------------
                                                      (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                   <C>              <C>      <C>          <C>      <C>           <C>
LOAN PORTFOLIO CLASSIFICATION
Normal and Normal Performance.......................   Ps. 9,673.8      88.02%           -        -   Ps. 9,673.8    79.28%
Potential Risk and Improper Fulfillment ............         932.4       8.48            -        -         932.4     7.64
With Problems and Defective Fulfillment.............         318.7       2.90   Ps.  551.4    45.50%        870.1     7.13
High Risk of Insolvency and Difficulty in Recovery..          65.5       0.60        449.5    37.09         515.0     4.22
Uncollectible.......................................             -          -        196.5    16.21         196.5     1.61
Uncollectible Due to Technical Reasons..............             -          -         14.6     1.20          14.6     0.12
                                                       -------------------------------------------------------------------
TOTAL...............................................   Ps.10,990.4     100.00%  Ps.1,212.0   100.00%  Ps.12,202.4   100.00%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                            AS OF DECEMBER 31, 2001
                                                      ----------------------------------------------------------------------
                                                       AMOUNTS NOT YET DUE(1)    AMOUNTS PAST DUE        TOTAL LOANS
----------------------------------------------------------------------------------------------------------------------------
                                                      (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                   <C>              <C>      <C>          <C>      <C>           <C>
LOAN PORTFOLIO CLASSIFICATION ......................
Normal and Normal Performance.......................   Ps.19,120.5      96.32%           -        -   Ps.19,120.5    91.54%
Potential Risk and Improper Fulfillment ............         358.9       1.81            -        -         358.9     1.72
With Problems and Defective Fulfillment.............         197.0       0.99   Ps.  156.1    15.05%        353.1     1.69
High Risk of Insolvency and Difficulty in Recovery..         174.3       0.88        619.3    59.73         793.6     3.80
Uncollectible.......................................             -          -        215.6    20.79         215.6     1.03
Uncollectible Due to Technical Reasons..............             -          -         45.9     4.43          45.9     0.22
                                                       -------------------------------------------------------------------
TOTAL...............................................   Ps.19,850.7     100.00%  Ps.1,036.9   100.00%  Ps.20,887.6   100.00%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -81-
<PAGE>

<TABLE>
<CAPTION>
                                                                               AS OF DECEMBER 31, 2000
                                                       ----------------------------------------------------------------------
                                                        AMOUNTS NOT YET DUE(1)     AMOUNTS PAST DUE         TOTAL LOANS
-----------------------------------------------------------------------------------------------------------------------------
                                                       (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                    <C>              <C>       <C>         <C>       <C>            <C>
LOAN PORTFOLIO CLASSIFICATION ......................
Normal and Normal Performance.......................   Ps.  19,605.7     97.74%           -        -    Ps. 19,605.7    94.36%
Potential Risk and Improper Fulfillment ............           332.9      1.66            -        -           332.9     1.60
With Problems and Defective Fulfillment.............            64.2      0.32    Ps. 103.6    14.41%          167.8     0.81
High Risk of Insolvency and Difficulty in Recovery..            56.1      0.28        396.9    55.19           453.0     2.18
Uncollectible.......................................               -         -        214.9    29.88           214.9     1.03
Uncollectible Due to Technical Reasons..............               -         -          3.7     0.52             3.7     0.02
                                                       ----------------------------------------------------------------------
TOTAL...............................................   Ps.  20,058.9    100.00%   Ps. 719.1   100.00%   Ps. 20,778.0   100.00%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                               AS OF JUNE 30, 2000
                                                       ----------------------------------------------------------------------
                                                        AMOUNTS NOT YET DUE(1)     AMOUNTS PAST DUE          TOTAL LOANS
-----------------------------------------------------------------------------------------------------------------------------
                                                       (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                    <C>              <C>       <C>         <C>       <C>            <C>
LOAN PORTFOLIO CLASSIFICATION ......................
Normal and Normal Performance.......................   Ps.  19,765.8     97.69%           -        -    Ps. 19,765.8    94.37%
Potential Risk and Improper Fulfillment ............           351.7      1.74            -        -           351.7     1.68
With Problems and Defective Fulfillment.............            69.5      0.34    Ps.  88.3   12.39%           157.8     0.75
High Risk of Insolvency and Difficulty in Recovery..            45.7      0.23        395.8    55.53           441.5     2.11
Uncollectible.......................................               -         -        227.6    31.93           227.6     1.09
Uncollectible Due to Technical Reasons..............               -         -          1.1     0.15             1.1     0.00
                                                       ----------------------------------------------------------------------
TOTAL...............................................   Ps.  20,232.7    100.00%   Ps. 712.8   100.00%   Ps. 20,945.5   100.00%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                               AS OF JUNE 30, 1999
-----------------------------------------------------------------------------------------------------------------------------
                                                        AMOUNTS NOT YET DUE(1)     AMOUNTS PAST DUE          TOTAL LOANS
-----------------------------------------------------------------------------------------------------------------------------
                                                       (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                    <C>              <C>       <C>          <C>      <C>            <C>
LOAN PORTFOLIO CLASSIFICATION ......................
Normal and Normal Performance.......................   Ps.  17,814.0     97.14%           -        -    Ps. 17,814.0    93.58%
Potential Risk and Improper Fulfillment ............           363.7      1.98            -        -           363.7     1.92
With Problems and Defective Fulfillment.............           103.5      0.57    Ps. 106.4    15.23%          209.9     1.10
High Risk of Insolvency and Difficulty in Recovery..            57.0      0.31        385.6    55.21           442.6     2.32
Uncollectible.......................................               -         -        204.2    29.24           204.2     1.07
Uncollectible Due to Technical Reasons..............               -         -          2.2     0.32             2.2     0.01
                                                       ----------------------------------------------------------------------
TOTAL...............................................   Ps.  18,338.2    100.00%   Ps. 698.4   100.00%   Ps. 19,036.6   100.00%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                               AS OF JUNE 30, 1998
                                                       ----------------------------------------------------------------------
                                                        AMOUNTS NOT YET DUE(1)     AMOUNTS PAST DUE       TOTAL LOANS
-----------------------------------------------------------------------------------------------------------------------------
                                                       (In millions of December 31, 2002, constant pesos, except percentages)
<S>                                                    <C>              <C>       <C>          <C>      <C>            <C>
LOAN PORTFOLIO CLASSIFICATION ......................
Normal and Normal Performance.......................   Ps.  16,155.3     97.63%           -        -    Ps. 16,155.3    94.40%
Potential Risk and Improper Fulfillment ............           261.3      1.58            -        -           261.3     1.53
With Problems and Defective Fulfillment.............            62.3      0.38    Ps.  33.9     5.98%           96.1     0.56
High Risk of Insolvency and Difficulty in Recovery..            69.2      0.41        468.1    82.71           537.4     3.14
Uncollectible.......................................               -         -         62.7    11.08            62.7     0.36
Uncollectible Due to Technical Reasons..............               -         -          1.3     0.23             1.3     0.01
                                                       ----------------------------------------------------------------------
TOTAL...............................................   Ps.  16,548.1    100.00%   Ps. 566.0   100.00%   Ps. 17,114.1   100.00%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Amounts not yet due represent the portion of a loan that has not yet become
due, such as the future installments of a consumer loan.

                                      -82-

<PAGE>

ANALYSIS OF AMOUNTS PAST DUE AND NON-ACCRUAL LOANS

The following table analyzes amounts past due (past due 91 days or more) in
Banco Galicia's loan portfolio, by type of loan and by type of guarantee at the
dates indicated, as well as the Bank's non-accrual loan portfolio, by type of
guarantee, the Bank's allowance for loan losses and its main asset quality
ratios at the dates indicated.

<TABLE>
<CAPTION>
                                                            AS OF DECEMBER 31,                        AS OF JUNE 30,
                                                 --------------------------------------   --------------------------------------
                                                    2002          2001          2000          2000         1999         1998
--------------------------------------------------------------------------------------------------------------------------------
                                                        (In millions of December 31, 2002 constant pesos, except ratios)
<S>                                              <C>           <C>          <C>           <C>           <C>          <C>
TOTAL LOANS (1)................................  Ps.12,202.4   Ps.20,887.6  Ps.20,778.0   Ps.20,945.5   Ps.19,036.6  Ps.17,114.1
NON-ACCRUAL LOANS (2)
  With Preferred Guarantees....................        605.5         573.4        363.7         380.5         352.6        327.9
  With Other Guarantees........................        280.5         196.8         35.2          65.3          81.5         99.8
  Without Guarantees...........................        710.2         638.0        440.5         382.2         424.8        269.8
                                                 --------------------------------------   --------------------------------------
TOTAL NON-ACCRUAL LOANS (2)....................  Ps. 1,596.2   Ps. 1,408.2  Ps.   839.4   Ps.   828.0   Ps.   858.9  Ps.   697.5
PAST DUE LOAN PORTFOLIO
 Non-Financial Public Sector...................            -             -            -             -             -            -
 Local Financial Sector........................            -             -            -             -             -            -
 Non-Financial Private Sector and Residents
 Abroad
  Advances.....................................  Ps.    64.3   Ps.    79.1  Ps.    59.4   Ps.    73.0   Ps.    54.4  Ps.    91.5
  Notes........................................        734.6         304.9        111.4         136.5         119.3        140.9
  Mortgage Loans...............................        215.3         310.8        201.0         188.1         192.7        215.8
  Pledge Loans.................................         35.4          73.4         77.8          89.6          66.8         51.1
  Personal Loans...............................         58.1          93.7         81.9          75.6          52.9         38.2
  Credit-Card Loans............................         99.5         173.0        169.9         149.0         206.2         23.2
  Placements with Correspondent Banks..........            -             -            -             -             -            -
  Other Loans..................................          4.8           2.0         17.7           1.0           6.1          5.3
                                                 --------------------------------------   --------------------------------------
TOTAL PAST DUE LOANS...........................  Ps. 1,212.0   Ps. 1,036.9  Ps.   719.1   Ps.   712.8   Ps.   698.4  Ps.   566.0
 Past Due Loans
  With Preferred Guarantees....................  Ps.   445.4   Ps.   384.9  Ps.   285.7   Ps.   306.0   Ps.   254.7  Ps.   254.5
  With Other Guarantees........................        171.0          75.6         32.5          62.7          79.1         57.5
  Without Guarantees...........................        595.6         576.4        400.9         344.1         364.6        254.0
                                                 --------------------------------------   --------------------------------------
TOTAL PAST DUE LOANS...........................  Ps. 1,212.0   Ps. 1,036.9  Ps.   719.1   Ps.   712.8   Ps.   698.4  Ps.   566.0
ALLOWANCE FOR LOAN LOSSES......................  Ps. 1,667.3   Ps. 1,041.2  Ps.   590.9   Ps.   571.9   Ps.   586.1  Ps.   474.0
RATIOS (%)
 As a % of  Total Loans:
 - Total Past Due Loans .......................         9.93%         4.96%        3.46%         3.40%         3.67%        3.31%
 - Past Due Loans with Preferred Guarantees....         3.65          1.84         1.38          1.46          1.34         1.49
 - Past Due Loans with Other Guarantees........         1.40          0.36         0.16          0.30          0.42         0.34
 - Past Due Unsecured Amounts..................         4.88          2.76         1.93          1.64          1.91         1.48
 - Non-Accrual Loans (2).......................        13.08          6.74         4.04          3.95          4.51         4.08
 - Non-Accrual Loans (2) (Excluding Interbank
   Loans)......................................        13.25          6.87         4.33          4.23          5.07         4.60
 Allowance for Loan Losses as a % of :
 - Total Loans.................................        13.66          4.98         2.84          2.73          3.08         2.77
 - Total Loans Excluding Interbank Loans.......        13.84          5.08         3.04          2.92          3.46         3.13
 - Total Non-Accrual Loans (2).................       104.45         73.94        70.40         69.07         68.24        67.96
 Non-Accrual Loans with Guarantees as a
  Percentage of Non-Accrual Loans (2)............      55.51         54.70        47.53         53.84         50.54        61.32
Non-Accrual Loans as a Percentage of Total
  Past Due Loans................................      131.70        135.81       116.73        116.16        122.98       123.23
================================================================================================================================
</TABLE>

(1)      Before the allowance for loan losses.

(2)      Non-accrual loans are defined as those loans in the categories of: (a)
         consumer portfolio: defective fulfillment, difficulty in recovery,
         uncollectible and uncollectible due to technical reasons; (b)
         commercial portfolio: with problems, high risk of insolvency,
         uncollectible and uncollectible due to technical reasons.

                                      -83-

<PAGE>

As a result of the Argentine economic situation in 2002 and of the measures
taken by the government that changed the terms and conditions of the Bank's
private sector loan portfolio, most of the commercial portfolio of the Bank
underwent a restructuring process. This process had not been completed as of
December 31, 2002. See "--Main Regulatory Changes in 2002 and 2003--Loans to the
Private Sector and Asymmetric Indexation."

The amount of loan restructurings included in the non-accrual loan balance as of
December 31, 2001 was Ps.47.2 million. The amounts were Ps.49.1 million as of
December 31, 2000, Ps.50.2 million as of June 30, 2000, Ps.64.9 million as of
June 30, 1999, and Ps.147.9 as of June 30, 1998.

Under Argentine Central Bank rules, banks are required to cease the accrual of
interest or to establish provisions of 100% of the interest accrued on all loans
pertaining to the non-accrual loan portfolio, that is, all loans to borrowers in
the categories of:

         -        in the consumer portfolio, defective fulfillment, difficulty
                  in recovery, uncollectible and uncollectible due to technical
                  reasons.

         -        in the commercial portfolio, with problems, high risk of
                  insolvency, uncollectible and uncollectible due to technical
                  reasons.

During the year ended December 31, 2002, interest income that would have been
recorded on those non-accrual loans on which the accrual of interest was
discontinued amounted to Ps.40.1 million. Recoveries of interest on loans
classified as non-accrual on which the accrual of interest had been discontinued
amounted to approximately Ps.2 million (recorded under "Miscellaneous Income")
during the same period.

During the year ended December 31, 2001, and the six-month period ended December
31, 2000, interest income that would have been recorded on those non-accrual
loans on which the accrual of interest was discontinued amounted to Ps.118.6
million and Ps.24.2 million, respectively. Recoveries of interest on loans
classified as non-accrual on which the accrual of interest had been discontinued
amounted to approximately Ps.5.9 million and Ps.1.3 million (recorded under
"Miscellaneous Income") during the same periods, respectively.

The severe economic crisis undergone by Argentina during fiscal year 2002 had as
a direct consequence the significant deterioration of the Bank's loan portfolio
quality as compared to that of prior fiscal years. However, the Bank made a
substantial effort to increase its allowances for loan losses and the coverage
of the non-accrual loan portfolio with allowances for loan losses during the
fiscal year. As of December 31, 2002, the non-accrual portfolio as a percentage
of total loans was 13.08%. As mentioned before, this high level of non-accrual
loans reflects both the deterioration of Argentina's economic situation during
fiscal year 2002 and the measures adopted by the government aimed at
restructuring private-sector debts. With respect to the private-sector loan
portfolio, the non-accrual loan portfolio represented 35.46% at the close of the
fiscal year.

Due to the significant allowances set up in fiscal year 2002, coverage of
non-accrual loan portfolio with allowances reached 104.45% at the end of the
fiscal year and allowances as a percentage of total loans amounted to 13.36%. At
that same date, the non-accrual portfolio with guarantees amounted to 55.51% of
total loans.

Loans classified as category "2.b" pursuant to the Argentine Central Bank's
classification, which correspond to loans under a restructuring process but that
do not constitute non-performing portfolios, amounted to Ps.460.8 million as of
December 31, 2002. Coverage with allowances for loan losses of the non-accrual
portfolio plus this loan portfolio was 81.05% of total loans at the end of the
fiscal year.

The significant increase in the relative size of the non-accrual portfolio as of
December 31, 2001, when compared to the December 31, 2000 level is due to the
persistence during 2001 of the recession that affected the Argentine economy
since the second half of calendar 1998. In addition, since early December 2001,
this recession and the deterioration of Argentina's public sector's financial
condition which had led to massive runs on the financial system deposits that
had worsened throughout 2001, deepened into an unprecedented political and
economic crisis which disrupted Argentina's financial system and real economy.

                                      -84-

<PAGE>

In the year ended June 30, 2000, the improvement in the non-accrual to total
loans ratio was due to an increase in charge-offs, rather than to an improvement
in the credit quality of the Bank's portfolio.

See "Item 5. Operating and Financial Review and Prospects--Results of Operations
of Grupo Galicia for the Fiscal Years Ended December 31, 2002 and December 31,
2001 and for the Six-Month Period Ended December 31, 2000."

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

The following table presents an analysis of the allowance for loan losses at the
dates indicated. Certain loans are charged-off directly to the income statement
and, therefore, are not reflected in the allowance.

<TABLE>
<CAPTION>
                                                   FISCAL YEAR ENDED         6 MONTHS                 FISCAL YEAR ENDED
                                                 --------------------------------------   ------------------------------------------
                                                   DECEMBER 31,            PERIOD ENDED                   JUNE 30,
                                                 --------------------------------------   ------------------------------------------
                                                     2002         2001          2000         2000          1999             1998
------------------------------------------------------------------------------------------------------------------------------------
                                                       (in millions of December 31, 2002 constant pesos, except percentajes)
<S>                                              <C>           <C>          <C>           <C>           <C>             <C>
TOTAL LOANS, AVERAGE (1).......................  Ps.15,130.5   Ps.19,829.4  Ps.19,506.4   Ps.18,094.8   Ps.16,422.7     Ps.15,071.0
ALLOWANCE FOR LOAN LOSSES AT THE BEGINNING
  OF THE PERIOD (*)............................  Ps  1,041.2   Ps.   590.9  Ps.   571.9   Ps.   586.1   Ps.   540.4(4)  Ps.   477.1
Changes in the Allowance for Loan Losses
  during the Period (*)

 Provisions Charged to Income..................      1,585.7         914.0        251.6         526.0         446.7           153.8
 Prior Allowances Reversed.....................            0          (2.0)        (2.8)         (3.5)         (0.2)           (2.8)
 Charge-Offs (A) ..............................       (303.1)       (461.7)      (229.8)       (536.7)       (400.8)         (154.1)
 Inflation Effect..............................       (656.5)            -            -             -             -               -
                                                 --------------------------------------   ------------------------------------------
ALLOWANCE FOR LOAN LOSSES AT PERIOD-END (*)....  Ps. 1,667.3   Ps. 1,041.2  Ps.   590.9   Ps.   571.9   Ps.   586.1     Ps.   474.0
Charge to the Income Statement during the
Period (*)
 Provisions Charged to Income..................      1,585.7         914.0        251.6         526.0         446.7           153.8
 Direct Charge-Offs, Net of Recoveries (B).....        (17.1)        (25.6)       (15.5)        (29.3)          0.7            (1.3)
 Recoveries of Provisions......................            -          (2.0)        (2.8)         (3.5)         (0.2)           (2.9)
                                                 --------------------------------------   ------------------------------------------
NET CHARGE TO THE INCOME STATEMENT.............  Ps. 1,568.6   Ps.   886.4  Ps.   233.3   Ps.   493.2   Ps.   447.2     Ps.   149.6
RATIOS (%)
 Charge-Offs (A+B) to Average Loans (2)........         1.89%         2.20%        2.20%         2.80%         2.44%           1.01%
 Net Charge to the Income Statement to
  Average Loans (3)............................        10.37          4.47         2.39          2.73          2.72            0.99
                                                 --------------------------------------   ------------------------------------------
</TABLE>

(1)      Before the allowance for loan losses.

(2)      Charge-offs plus direct charge-offs minus bad debts recovered.

(3)      Income statement charges consist of net provisions plus net direct
         charge-offs (direct charge-offs minus bad debts recovered).

(4)      The difference with the Ps.474.0 million June 30, 1998 balance reflects
         the incorporation of reserves for Ps. 66.4 million due to the
         consolidation of the regional credit card companies in which the Bank
         held majority interests.

As of December 31, 2002, the loan loss allowance was Ps.1,667.3 million. This
afforded coverage of the non-accrual portfolio at 104.45% of the total loan
portfolio, which is higher than the 73.94% and the 70.40% levels at December 31,
2001 and 2000, respectively.

The increase in the allowance for loan losses as of December 31, 2002, when
compared to December 31, 2001 and the increases in the fiscal year ended
December 31, 2001 the six-month period ended December 31, 2000 and in the year
ended June 30, 2000 when compared to the previous fiscal years, are part of a
continuing trend that reflects the continuous worsening of the economic
conditions in Argentina over the last 4 years. This is reflected in a general
deterioration of credit quality, higher levels of non-performing loans and
higher charge offs across the entire loan portfolio.

The increase in the years ended December 31, 2002 and 2001 can also be
attributed to the increased in the unallocated reserve as of each year end. For
an explanation of the increase in the Bank's general allowance, see "--Loan Loss
Provision Requirements--General Provisions" above.

                                      -85-

<PAGE>

The net charge to the income statement as a percentage of average loans
increased to 10.37% in fiscal year 2002 from 4.47% during the fiscal year ended
December 31, 2001 and 2.39% during the six months ended December 31, 2000. This
reflects the fact that the Bank assigned an increased portion of its income,
both to non-accrual portfolio charge offs and to provide for a higher coverage
of such portfolio with allowances, given that the quality of such portfolio
deteriorated significantly during 2001, especially in the last quarter of the
year, and in 2002, as a result of the increasingly adverse economic environment
existing in Argentina during 2001 and 2002.

See "Item 5. Operating and Financial Review and Prospects--Results of Operations
of Grupo Galicia for the Fiscal Years Ended December 31, 2002 and December 31,
2001 and for the Six Months Ended December 31, 2000--Provisions for Losses on
Loans and Other Receivables."

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

The following table presents the allocation of Banco Galicia's allowance for
loan losses among the various loan categories and shows such allowances as a
percentage of Banco Galicia's total loan portfolio before deducting the
allowance for loan losses, in each case for the periods indicated. The table
also shows each loan category as a percentage of Banco Galicia's total loan
portfolio before deducting the allowance for loan losses at the dates indicated.

<TABLE>
<CAPTION>
                                                                         AS OF DECEMBER 31,
                                  -----------------------------------------------------------------------------------------
                                               2002                          2001                         2000
                                  -----------------------------------------------------------------------------------------
                                                         LOAN
                                               % OF    CATEGORY              % OF     LOAN                % OF     LOAN
                                    AMOUNT     LOANS      %        AMOUNT    LOANS  CATEGORY %  AMOUNT    LOANS  CATEGORY %
---------------------------------------------------------------------------------------------------------------------------
                                                   (in millions of December 31, 2002, constant pesos)
<S>                               <C>          <C>     <C>       <C>         <C>    <C>         <C>       <C>    <C>
Non-Financial Public Sector.....           -       -    62.03%            -     -     41.15%         -       -     27.49%
Local Financial Sector..........           -       -     1.09             -     -      0.91          -       -      5.35
Non-Financial Private Sector and
  Residents Abroad
    Advances....................  Ps.   39.8    0.33%    1.84    Ps.   45.7  0.22%     3.85     Ps. 35.6  0.17%     4.62
    Notes.......................       564.1    4.62    12.55         217.3  1.04     18.46         76.0  0.37     23.61
    Mortgage Loans..............       121.0    0.99     7.02         153.1  0.73     15.65         99.4  0.48     16.72
    Pledge Loans................        24.1    0.20     1.56          33.2  0.16      4.00         36.9  0.18      4.18
    Personal Loans..............        48.0    0.39     0.97          64.2  0.31      2.77         57.5  0.28      3.87
    Credit-Card Loans...........        55.1    0.45     4.75          83.0  0.40      8.90         84.1  0.40      7.95
    Placements in Correspondent
    Banks                                  -       -     1.29             -     -      1.79            -     -      3.68
    Other ......................         0.0    0.00     6.90           3.8  0.02      2.52         10.7  0.05      2.53
Unallocated (1).................       815.2    6.68        -         440.9  2.10         -        190.7  0.91         -
                                  -----------------------------------------------------------------------------------------
TOTAL...........................  Ps.1,667.3   13.66%  100.00%   Ps.1,041.2  4.98%   100.00%    Ps.590.9  2.84%   100.00%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -86-

<PAGE>

<TABLE>
<CAPTION>
                                                                        AS OF JUNE 30,
                                  -----------------------------------------------------------------------------------------
                                               2000                          1999                         1998
                                  -----------------------------------------------------------------------------------------
                                               % OF      LOAN                % OF      LOAN               % OF      LOAN
                                    AMOUNT     LOANS  CATEGORY %   AMOUNT    LOANS  CATEGORY %  AMOUNT    LOANS  CATEGORY %
---------------------------------------------------------------------------------------------------------------------------
                                                      (in millions of December 31, 2002, constant pesos)
<S>                               <C>          <C>    <C>         <C>        <C>    <C>         <C>       <C>    <C>
Non-Financial Public Sector.....           -      -     26.11%            -     -     22.12%           -     -     15.29%
Local Financial Sector..........           -      -      3.77             -     -      4.90            -     -      4.45
Non-Financial Private Sector and
  Residents Abroad
    Advances....................  Ps.   39.8   0.19%     8.25     Ps.  30.8  0.16%     7.84     Ps. 48.5  0.28%    10.25
    Notes.......................        82.1   0.39      25.6          71.0  0.37     24.82         94.1  0.55     24.40
    Mortgage Loans..............        89.1   0.43     14.16          97.0  0.51     14.48        100.5  0.59     15.90
    Pledge Loans................        38.7   0.19      4.06          29.7  0.16      4.71         20.1  0.12      7.37
    Personal Loans..............        51.1   0.24      3.45          45.7  0.24      3.51         24.5  0.14      3.54
    Credit-Card Loans...........        86.1   0.41      6.84         133.0  0.70      6.41         15.3  0.09      3.53
    Placements in Correspondent
    Banks                                  -      -      5.82           0.0  0.00      8.75            -     -     10.96
    Other ......................        11.1   0.05      1.94          12.0  0.06      2.46         16.2  0.10      4.31
Unallocated (1).................       173.9   0.83         -         166.9  0.88      0.00        154.8  0.90         -
                                  -----------------------------------------------------------------------------------------
TOTAL...........................  Ps.  571.9   2.73%   100.00%    Ps. 586.1  3.08%   100.00%    Ps.474.0  2.77%   100.00%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The unallocated reserve consists of the allowances established on the
portfolio classified in the "normal" and "normal performance" categories and
includes additional reserves in excess of Argentine Central Bank minimum
requirements.

FOREIGN OUTSTANDINGS

Foreign outstandings for a particular country are defined as the sum of all
claims on third parties domiciled in such particular country, comprising
deposits or placements in banks, loans, acceptances and other assets. These
assets are mainly denominated in currencies other than Grupo Galicia's or Banco
Galicia's local currency. The following table shows Grupo Galicia's and Banco
Galicia's foreign outstandings to each country, where such outstandings are
greater than 1.0% of the respective total assets, for the dates indicated:

<TABLE>
<CAPTION>
                                                                                     AS OF DECEMBER 2002,
                                                                     ------------------------------------------------
                                                                        2002              2001               2000
---------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002 constant Pesos)
<S>                                                                  <C>              <C>                <C>
COUNTRY
United States
    Bank and Other Financial Institutions.........................   Ps.   204.5      Ps.    692.2       Ps.   1,590.9
    Other Loans...................................................             -                 -                   -
                                                                     -------------------------------------------------
TOTAL.............................................................         204.5             692.2             1,590.9
Brasil
    Bank and Other Financial Institutions.........................          50.9                 -                   -
    Other Loans...................................................             -                 -                   -
                                                                     -------------------------------------------------
TOTAL.............................................................          50.9                 -                   -
Cayman
    Bank and Other Financial Institutions.........................          49.7                 -               323.7
    Other Loans...................................................             -                 -                   -
                                                                     -------------------------------------------------
TOTAL.............................................................    Ps  . 49.7                 -               323.7
United Kingdom
    Bank and Other Financial Institutions.........................             -           1,103.6             2,679.4
    Other Loans...................................................             -                 -                   -
                                                                     -------------------------------------------------
TOTAL.............................................................             -      Ps.  1,103.6       Ps.   2,679.4
======================================================================================================================
</TABLE>

                                      -87-

<PAGE>

COMPOSITION OF DEPOSITS

The following table sets out the composition of Grupo Galicia's deposits as of
December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                      GRUPO GALICIA                BANCO GALICIA
                                                          --------------------------------------   --------------
                                                                   AS OF DECEMBER 31,              AS OF JUNE 30,
                                                          --------------------------------------   --------------
                                                             2002         2001          2000           2000
-----------------------------------------------------------------------------------------------------------------
                                                             (in millons of December 31, 2002, constant pesos)
<S>                                                       <C>          <C>           <C>           <C>
Current Accounts...................................       Ps.   724.0  Ps. 1,891.5   Ps. 1,352.6    Ps. 1,340.1
Other Demand Deposits..............................              13.3            -           7.0            1.7
Savings Accounts...................................             559.0      3,212.6       2,778.1        2,915.3
Other Special Accounts.............................               3.0          8.1           8.3            8.3
Time Deposits......................................           2,402.2      6,876.8      14,594.3       14,149.8
Other Deposits.....................................           1,088.8      1,266.5         529.3          512.4
Plus: Interest Payable and Differences in
Quotations.........................................               374        130.6         180.0          172.1
                                                          ---------------------------------------   -----------
TOTAL DEPOSITS.....................................       Ps. 5,164.3  Ps.13,386.1   Ps.19,449.6    Ps.19,099.7
---------------------------------------------------------------------------------------------------------------
</TABLE>

The table above shows the significant loss in deposits suffered by the Bank in
2001 as a consequence of the massive runs on deposits suffered by the Bank in
Argentina throughout 2001 and by its subsidiary, Galicia Uruguay, mainly
beginning in December 2001. Consolidated deposits fell 31.2% during 2001.

During 2002, the deposit fall continued. When comparing the December 31, 2002
levels with the previous years' levels, it should be noted that, in the table
above, previous years' figures were restated in constant currency of December
2002, by using the variation of the WPI during the year, that is by using a
coefficient of 2.1844. When constant figures are compared, the Bank's total
deposits decreased 61.4% during 2002. This decrease is to a large extent
explained by said restatement of the December 31, 2001, figures. In nominal
terms, the fall in the Bank's total deposits was 15.7%. However, (i) total
deposits as of December 31, 2002, included US$554.9 million of deposits at the
Bank's foreign branches and subisdiaries, that were dollar denominated and
valued at the market exchange rate and (ii) the exchange rate during 2002
increased from Ps. 1 per US dollar as of December 31, 2001 to Ps.3.363 as of
December 2002.

In addition to the deposit loss of the first half of 2002, the decrease in
savings accounts during the fiscal year is attributable to the fact that most
savings accounts were dollar denominated as of December 31, 2001 and these
deposits were restructured, with the balances of these restructured deposits
(net of decreases and amortization during 2002) shown under "Other Deposits" in
the table above. This line included as of December 31, 2002, Ps.940 million of
restructured deposits (principal only). The increase in this line in 2002 is due
to the fact that no restructured deposits were outstanding as of the close of
fiscal year 2001. The decrease in time deposits is due, in part, to the
restructuring of a large portion of Galicia Uruguay deposits as negotiable
obligations. Galicia Uruguay had consolidated deposits for US$1,355.7 million as
of December 2001 which were mostly time deposits. As of December 31, 2002 this
subsidiary's consolidated deposits amounted to US$550 million.

For more information on deposits, see "Item 5. Operating and Financial Review
and Prospects--Description of Consolidated Liabilities."

                                      -88-

<PAGE>

SHORT-TERM BORROWINGS

Grupo Galicia's short term borrowing represents mainly Banco Galicia's short
term borrowing.

<TABLE>
<CAPTION>
                                                                                     AS OF DECEMBER 31,
                                                                    --------------------------------------------------
                                                                         2002               2001              2000
----------------------------------------------------------------------------------------------------------------------
                                                                    (in millons of December 31, 2002, constant pesos)
<S>                                                                 <C>                 <C>               <C>
SHORT-TERM BORROWINGS
Argentine Central Bank............................................  Ps. 4,789.4         Ps. 2,696.3       Ps.     4.2
Other Banks and International Entities
    Lines of Credit from Domestic Banks...........................         47.6                42.4             119.9
    Lines of Credit from Foreign Banks............................      1,535.4               562.5           1,028.8
Repos with Domestic Banks.........................................            -               946.5                 -
Repos with Foreign Banks..........................................            -                87.4           1,136.6
Debt Securities...................................................        128.1               954.4           1,437.3
                                                                    -------------------------------------------------
Total.............................................................  Ps. 6,500.5         Ps. 5,289.5       Ps. 3,726.8
---------------------------------------------------------------------------------------------------------------------
</TABLE>

The table below includes for December 31, 2002, as short term borrowings
Ps.4,789 million of financial assistance from the Argentine Central Bank. This
financial assistance was received by the Bank before the implementation of the
Plan in May 2002, as a result of the run on deposits faced by the Bank in late
2001 and early 2002. Through Decree No.739/03 and No.1262/03 and Communique "A"
3940 and "A" 3941, the Argentine government and the Argentine Central Bank have
recently issued new rules to restructure the financial assistance received by
financial institutions during the Argentine crisis into liabilities repayable in
70 or 120 monthly installments, subject to certain conditions. See "--Argentine
Banking Regulation--Financial Assistance from the Argentine Central
Bank--Repayment of the Financial Assistance Granted Before April 1, 2003."
Therefore, such liabilities are at the date of this annual report subject to
restructuring into long term debt. Also included as short term borrowings as of
December 31, 2002, are borrowings from domestic and foreign banks currently past
due and undergoing restructuring negotiations, which have not finished at the
date hereof.

As of December 31, 2001, the principal categories of Banco Galicia's short-term
borrowing were "Repos with Domestic Banks", "Negotiable Obligations" and "Lines
of Credit from Foreign Banks." As of December 31, 2001, Grupo Galicia's short
term borrowing amounted to Ps.2,593.8 million, showing a 30.4% decrease as
compared to December 31, 2000 levels. This significant decrease was the
consequence of the deepening of the Argentine economic and political crisis
during 2001 which made it increasingly difficult for Argentine companies and
banks to fund themselves during 2001, especially in the foreign markets, but
also domestically. Ultimately the only source of funding available to banks in
the local market became the Argentine Central Bank, in its capacity as a lender
of last resort. The change in the composition of the Bank's short term
borrowings, the most notable being the significant reduction of repo
transactions with foreign banks, was also a consequence of the same factors.
Repos with foreign banks were partially replaced by repos with domestic banks.
The line "Repos with Domestic Banks" mainly represents the Bank's repos with the
Argentine Central Bank.

See "Item 3. Key Information--Risk Factors" and "Item 5. Operating and Financial
Review and Prospects--The Argentine Economy in 2002."

Banco Galicia's short-term borrowings totaled Ps.3,726.8 million as of December
30, 2000.

The following table shows for the significant short-term borrowings of Grupo
Galicia for the fiscal years ended December 31, 2002 and 2001 and for the
six-month period ended December 31, 2000:

-        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.

                                      -89-

<PAGE>

The same is shown for Banco Galicia for the year ended December 31, 2000.

<TABLE>
<CAPTION>
                                                                            GRUPO GALICIA, AS OF DECEMBER 31,
                                                                    -------------------------------------------------
                                                                        2002               2001            2000(*)
---------------------------------------------------------------------------------------------------------------------
                                                             (in millons of December 31, 2002, constant pesos, except
                                                                                      as noted)
<S>                                                                 <C>                <C>               <C>
ARGENTINE CENTRAL BANK
    Weighted-average interest rate at end of period........                4.38%             9.00%                 -
    Maximun balance recorded at the monthly closing dates..         Ps. 4,789.4        Ps.    3.9        Ps.     7.4
    Average balances for each period.......................             4,260.7               0.4                5.7
    Weighted-average interest rate for the period..........               29.09%             9.00%                 -
LINES OF CREDIT FROM DOMESTIC BANKS
    Weighted-average interest rate at end of period........                6.48%            20.35%             10.21%
    Maximun balance recorded at the monthly closing dates..         Ps.   143.1        Ps.  170.8        Ps.   165.6
    Average balances for each period.......................                72.5             181.1              135.4
    Weighted-average interest rate for the period..........                9.86%            37.03%             11.98%
LINES OF CREDIT FROM FOREIGN BANKS
    Weighted average interest rate at end of period........                6.20%             6.51%              7.74%
    Maximun balance recorded at the monthly closing dates..         Ps. 1,861.4        Ps.  908.9        Ps. 1,178.1
    Average balances for each period.......................             1,430.7             709.5            1,072.8
    Weighted average interest rate for the period..........                6.12%             6.19%              8.00%
REPOS WITH DOMESTIC BANKS
    Weighted-average interest rate at end of period........                   -              9.00%                 -
    Maximun balance recorded at the monthly closing dates..         Ps. 1,047.7        Ps.1,248.2                  -
    Average balances for each period.......................               328.0              91.1                  -
    Weighted-average interest rate for the period..........               33.42%             9.13%                 -
REPOS WITH FOREIGN BANKS
    Weighted-average interest rate at end of period........                   -              3.50%              6.88%
    Maximun balance recorded at the monthly closing dates..                   -        Ps.  457.9        Ps. 1,281.6
    Average balances for each period.......................                   -             362.6            1,069.5
    Weighted-average interest rate for the period..........                   -              3.91%              7.11%
NEGOTIABLE OBLIGATIONS
    Weighted-average interest rate at end of period........               16.18%             9.44%              7.20%
    Maximun balance recorded at the monthly closing dates..         Ps.   236.6        Ps.1,365.5        Ps. 1,437.3
    Average balances for each period.......................               181.1           1,224.8            1,200.6
    Weighted-average interest rate for the period..........               16.19%             8.86%              7.06%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Six months ended December 31, 2000. Rates have been annualized.

REGULATORY CAPITAL

The capital adequacy of Grupo Galicia is not under the supervision of the
Argentine Central Bank.

Grupo Galicia has a minimum capital requirement established by the Commercial
Companies' Law (Ley de Sociedades Comerciales) of Ps.0.012 million.

BANCO GALICIA

Due to the significant changes made during 2002 to the financial system's
operations, which significantly affected the variables to determine the minimum
capital requirements, through its Communiques "A" 3599 and "A" 3604 dated May 3
and 9, 2002, respectively, the Argentine Central Bank suspended the submission
of this information by financial institutions.

Until December 31, 2001, the Bank complied with the minimum capital requirements
established by the Argentine Central Bank. Banco Galicia had to comply with the
minimum capital requirements established by the Argentine Central Bank, which
were based on the methodology of the Basle Committee on Banking Supervision of
the Bank

                                      -90-

<PAGE>

for International Settlements (the "Basle Committee"). Banks had to comply with
capital requirements both on an unconsolidated basis and on a consolidated basis
with its significant subsidiaries. Banco Galicia's significant subsidiaries are
Galicia Uruguay and the regional credit-card companies that Banco Galicia
indirectly controls. For more information on Argentine Central Bank's minimum
capital requirement rules, see "--Argentine Banking Regulation--Capital Adequacy
Requirements"

The table below presents Banco Galicia's capital requirement and computable
capital for the dates indicated. The information is consolidated with
significant subsidiaries, with the regional credit card companies incorporated
in June 1999.

<TABLE>
<CAPTION>
                                                                 AS OF DECEMBER 31,                      AS OF JUNE 30,
                                                       ------------------------------------   -------------------------------------
                                                        2002(*)       2001          2000         2000          1999         1998
-----------------------------------------------------------------------------------------------------------------------------------
                                                           (in millons of December 31, 2002, constant pesos, except percentages)
<S>                                                    <C>         <C>          <C>           <C>           <C>          <C>
SHAREHOLDERS' EQUITY................................   Ps.1,538.3  Ps.3,063.6   Ps. 2,907.7   Ps. 2,909.9   Ps.2,644.7   Ps.2,378.0
ARGENTINE CENTRAL BANK MINIMUM CAPITAL REQUIREMENTS
  Allocated to Financial Assets ....................            -     1,452.6       1,639.0       1,567.6      1,705.2      1,573.7
  Allocated to Fixed Assets ........................            -       200.5         154.4         147.2        143.5        163.0
  Allocated to Market Risk..........................            -         0.2           3.5          11.1          2.8         29.8
  Allocated to Interest-Rate Risk...................            -        63.6          55.9          48.1            -            -
  Lending to the Non-Financial Public Sector........            -        55.3          11.8             -            -            -
  Government Securities in Investment Accounts......            -        91.5         100.5             -            -            -
                                                       ------------------------------------   -------------------------------------
MINIMUM CAPITAL REQUIRED BY THE ARGENTINE CENTRAL
 BANK (A)                                                       -  Ps.1,863.7   Ps. 1,965.1   Ps. 1,774.0   Ps.1,851.5   Ps.1,766.5
CAPITAL CALCULATED UNDER ARGENTINE BANKING GAAP
  Core Capital......................................            -  Ps.3,076.3   Ps. 2,742.3   Ps. 2,620.9   Ps.2,366.2   Ps.2,133.5
  Supplemental Capital..............................            -       157.3         200.7         347.1        245.5        333.1
 Deductions
  Investments in Financial Entities.................            -        (2.2)        (36.9)        (53.5)       (71.0)       (72.7)
  Organization Expenses.............................            -      (206.6)       (185.2)       (161.9)      (137.4)      (110.1)
  Goodwill Recorded from June 30, 1997..............            -      (256.0)       (179.8)       (152.7)      (259.3)       (92.8)
  Real Estate Properties for Banco Galicia's Own Use
   and Miscellaneous, for which no Title Deed has
   been Made........................................            -       (61.2)        (10.5)        (18.3)       (45.9)           -
  Other.............................................            -       (57.5)        (19.7)        (10.5)       (13.3)       (26.3)
                                                       ------------------------------------   -------------------------------------
 Total..............................................            -      (583.5)       (432.1)       (396.9)      (526.9)      (301.9)
  Additional Capital - Market Variation.............            -         2.2          (0.8)          3.5          1.1          0.9
                                                       ------------------------------------   -------------------------------------
CAPITAL CALCULATED UNDER ARGENTINE BANKING GAAPB)...            -  Ps.2,652.3   Ps. 2,510.1   Ps. 2,574.6   Ps.2,085.9   Ps.2,165.6
EXCESS CAPITAL
  Excess over required Capital (B)-(A)..............            -  Ps.  788.6   Ps.   545.0   Ps.   800.6   Ps.  234.4   Ps.  399.1
  Excess over Required Capital as a % of Required
   Capital...........................................           -       42.31%        27.73%        45.13%       12.66%       22.59%
  Excess over Required Capital, excluding Convertible
   Securities, as a % of Required Capital............           -       42.31         27.73         45.13        12.66        22.59
Total Capital Ratio..................................           -       17.18         15.26         17.34        13.08        14.26
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Through its Communiques "A" 3599 and "A" 3604 dated May 3 and 9, 2002,
respectively, the Argentine Central Bank suspended the submission of this
information.

As of December 31, 2001, the Bank's computable capital exceeded the minimum
capital requirement of Ps.1,863.7 million by Ps.788.6 million, representing an
excess of 42.31%. This represented a Ps.243.6 million increase in excess
computable capital from the December 31, 2000 level, primarily due to a Ps.101.4
million decrease in the minimum capital requirement and a Ps.142.2 million
increase in the regulatory capital calculated under the Argentine Central Bank
rules. The lower minimum capital requirement can be explained by the reduction
in the risk-weighted value of financial assets, mainly due to the decrease in
the average loan balance during 2001, while the higher computable capital was
mainly a consequence of the increase in retained earnings.

                                      -91-
<PAGE>

For more information regarding Banco Galicia's capital, see "Item 5. Operating
and Financial Review and Prospects -- Capital."

GOVERNMENT REGULATION

 As a financial services holding company, Grupo Galicia does not have a specific
institution controlling its activities as a holding entity. Nevertheless, its
subsidiaries have different regulatory entities regulating their activities.

In the case of Banco Galicia, the Argentine Central Bank is the regulatory
entity. For a description of Argentine banking regulations and the main
regulatory changes introduced by the government affecting financial
institutions' activities, see "--Main Regulatory Changes in 2002 and 2003" and
"--Argentine Banking Regulation" below.

In relation to the insurance business, Sudamericana Holding S.A. is regulated by
the National Insurance Superintendency and Laws 17,418 and 20,091. The insurance
companies held by Sudamericana Holding S.A. are: Galicia Vida Compania de
Seguros S.A., Galicia Retiro Compania de Seguros S.A., Aseguradora de Personas
Galicia S.A. (formerly - Hartford Seguros de Vida S.A.) and Instituto de Salta
Compania de Seguros de Vida S.A., Galicia Vida Compania de Seguros S.A., Galicia
Retiro Compania de Seguros S.A., Aseguradora de Personas Galicia, Instituto de
Salta Compania de Seguros de Vida S.A. These companies are regulated by
Argentina's Superintendency of Insurance. Sudamericana Holding S.A. also holds
Medigap Salud S.A. and Sudamericana Asesores de Seguros S.A., both companies are
regulated by the Commercial Companies' Law.

Net Investment S.A., our Internet incubator, and B to B Comercial S.A. do not
have a specific regulating agency.

Galicia Warrants is regulated by the National Law 9,643.

MINIMUM CAPITAL REQUIREMENTS OF NON-BANKING COMPANIES

Grupo Galicia, as well as its controlled companies, except for Banco Galicia and
the Sudamericana Holding S.A.'s affiliates mentioned in the following paragraph,
are regulated by the Commercial Companies' Law. Section 186 of this Law
establishes that the capital of a corporation (sociedad anonima) cannot be less
than Ps.12,000 (twelve thousand pesos).

Galicia Vida Compania de Seguros S.A., Galicia Retiro Compania de Seguros S.A.,
Aseguradora de Personas Galicia S.A. and Instituto de Salta Compania de Seguros
de Vida S.A. must meet the minimum capital requirements set by General
Resolution No. 25,804 of Argentina's Superintendency of Insurance.

The abovementioned resolution requires insurance companies to maintain a minimum
capital level equivalent to the highest of the amounts calculated as follows:

a)    By line of insurance: This method establishes a fixed amount by line of
      insurance. For life insurance companies, it is Ps.750,000, rising to Ps.3
      million for companies that offer pension-linked life insurance. For
      retirement insurance companies that do not offer life annuities or
      annuities covering disability and other work-related risks, the
      requirement is Ps.2 million.

b)    By premiums and additional fees: To use this method, the company must
      calculate the sum of the premiums written and additional fees earned in
      the last 12 months. Of the total, the company must calculate 18% of any
      result up to Ps.5 million, and 16% of any result over Ps.5 million.
      Finally, it must add the resulting figures and adjust the total by the
      ratio of net paid claims to gross paid claims for the last 36 months. This
      ratio must be at least 50%.

c)    By claims: To use this method, the company must calculate the sum of gross
      claims paid during the 36 months prior to the end of the period under
      analysis. To that amount, it must add the difference between the balance
      of unpaid claims as of the end of the period under analysis and the
      balance of unpaid claims as of the 36th month prior to the end of the
      period under analysis. The resulting figure must be divided by three. Then
      the company must calculate 26% of any result up to Ps.3.5 million, and 23%
      of any result over Ps.3.5 million. The resulting

                                      -92-

<PAGE>

      figure must be adjusted by the ratio of net paid claims to gross paid
      claims for the last 36 months. This ratio must be at least 50%.

d)    For life insurance companies that offer policies with an investment
      component, the figures obtained in b) and c) must be increased by an
      amount equal to 4% of the technical reserves. The latter total must be
      adjusted by the ratio of net claims reserves to gross claims reserves (at
      least 85%), plus 0.03% of at-risk capital adjusted by the ratio of net
      claims reserves to gross claims reserves (at least 50%).

The minimum required capital must then be compared to computable capital,
defined as shareholder's equity less non-computable assets. Non-computable
assets consist mainly of deferred charges, pending capital contributions, and
excess investments in authorized instruments.

MAIN REGULATORY CHANGES IN 2002 AND 2003

On January 7, 2002, the government enacted Law 25,561 (Public Emergency and
Foreign Exchange System Reform Law, the "Public Emergency Law") that involved
profound changes to the prevailing economic model. The main measures taken by
the government in 2002, through the enactment of the Public Emergency Law and a
series of decrees, include the following:

-     ratifying the suspension of payments of Argentina's sovereign debt except
      for debt with the multilateral credit agencies;

-     repealing of the articles of the Convertibility Law that had established
      in 1991 the one-to-one peso-dollar parity, devaluing the peso and
      subsequently allowing the peso to float, which resulted in an increase in
      such parity of approximately 240% during 2002;

-     tightening of foreign-exchange controls and restrictions to transfers
      abroad, which began to be loosened at year end;

-     ratifying and tightening the restrictions to cash withdrawals from bank
      deposits established in December 2001 (the "corralito"), restrictions that
      were lifted in December 2002;

-     establishing a compulsory "asymmetric" conversion of certain
      dollar-denominated assets and liabilities into peso-denominated assets and
      liabilities at different exchange rates ("asymmetric pesification") , as
      follows:

         -     private sector debt (individual and corporate dollar-denominated
               debt) with financial institutions, and other creditors, were
               converted into peso-denominated debt at a one-to-one exchange
               rate;

         -     dollar-denominated public sector debt instruments in financial
               institutions' portfolios, both national and provincial, were
               converted into peso-denominated instruments at an exchange rate
               of Ps.1.4 per U.S. dollar; and

         -     dollar-denominated bank deposits were converted into
               peso-denominated bank deposits at an exchange rate of Ps.1.4 per
               U.S. dollar, while public-sector debt, bank and corporate debt
               governed by foreign law remained dollar-denominated;.

-     modifying the yields of assets and the cost of liabilities pesified at the
      Ps.1.40 per US dollar exchange rate, establishing fixed maximum and
      minimum interest rates, respectively, and establishing the indexation of
      the capital of those assets and liabilities to the variation of prices or
      salaries;

-     restructuring bank peso-denominated time deposits and dollar-denominated
      deposits, above certain amounts, and establishing a repayment schedule
      ending in 2003 and 2005 depending on whether the deposit was originally
      peso or dollar-denominated (these measures where known as the "corralon");

                                      -93-

<PAGE>

-     establishing a series of voluntary swaps of deposits in the "corralito" or
      of restructured deposits for government bonds, as a response to the
      inability of the financial system to return deposits in accordance with
      their original terms and conditions. Through Decree No.739/03 of April 1,
      2003, the lifting of the "corralon" was established, with the possibility
      for depositors to opt for cash (or a time deposit) and government bonds in
      exchange for their deposits;

-     amending the charter of the Argentine Central Bank.; and

-     allocating government bonds to financial institutions in compensation for
      the losses that would otherwise arise from the "asymmetric pesification."
      At the date hereof, the government and the Argentine Central Bank have
      provided a series of rules to determine the amount of compensation in
      connection with the "asymmetric pesification" to which each financial
      institution is entitled in the form of government bonds. However, certain
      situations remain that have not been contemplated by such rules, such as
      the provision of compensation for the effects of the "asymmetric
      pesification" on the balance sheet of non-banking subsidiaries with
      complementary activities.

In addition, despite the fact that a project is at the consideration of Congress
that contemplates the provision of compensation under the form of
peso-denominated government bonds maturing in 2013 (Boden 2013) of certain
issues that would require that financial institutions be compensated for, a
definition relating to these issues on the part of the authorities is pending at
the date hereof. The issues that would require that financial institutions be
compensated for are (i) the enforcement by the government of different inflation
adjustment coefficients for pesified bank assets and liabilities, and (ii) the
fact that banks have had to repay dollar-denominated deposits, pursuant to
depositors' judicial actions, at exchange rates greater than Ps.1.4 per US
dollar; the exchange rate at which the dollar deposits were initially pesified
by the government.

Some of these measures are described in more detail below and under "Argentine
Banking Regulation."

FOREIGN EXCHANGE AND MONETARY SYSTEM

The Public Emergency Law put an end to the more than 10-year period of 1 to 1
parity between the peso and the US dollar under the provisions of the
Convertibility Law and granted the Executive the power to set the exchange rate
between the peso and foreign currencies and to regulate the foreign exchange
market.

On January 24, 2002, the government amended the charter of the Argentine Central
Bank to allow it to print currency, eliminating the limitations introduced in
1991 by the Convertibility Law. It also enabled the Argentine Central Bank to
make short term advances to the national government for amounts not to exceed
10% of the national government's cash revenues during the prior 12 months and to
act as a lender of last resort by providing financial assistance to financial
institutions experiencing liquidity difficulties.

On January 10, 2002, through Decree No.71/02, President Duhalde established a
"dual" foreign exchange system consisting of an official foreign exchange market
where the exchange rate was fixed at Ps.1.4 per US$1 for export and import
transactions and certain transactions subject to the Argentine Central Bank
approval, and a free foreign exchange market for the remaining transactions
relating to remittance or collection of foreign currency to or from abroad.
Quotations on the free market were to be set by supply and demand.

On January 11, 2002, after the Argentine Central Bank ended the foreign exchange
market the banking holiday that had been imposed on December 21, 2001, the peso
was allowed to float in the free market for the first time since 1991. Banco
Nacion published the first quotation for the free market at Ps.1.60 per US$1
(selling rate) and Ps.1.4 per US$1 (buying rate). Heightened demand for scarce
dollars, caused by uncertainty and by the lack of any other investment
alternatives within the "corralito", led the exchange rate to increase well
above the Ps.1.4 per dollar exchange rate used by the government in the official
market. The Argentine Central Bank intervened on several occasions by selling
dollars in order to support the peso. However, the exchange rate continued to
move against the peso. On February 3, 2002, the Executive announced the
replacement of the dual exchange rate system with a single freely floating
exchange rate for all transactions. On the same day, a new banking holiday was
imposed, which lasted until February 8, 2002, and a foreign exchange market
holiday was imposed, which was lasted until February

                                      -94-

<PAGE>

11, 2002. As of June 30, 2002, according to Banco Nacion's quotations, the
exchange rate was approximately Ps.3.80 per US dollar. Beginning in the second
half of the year, the policy of combining the sale of international reserves
with the tightening of controls over the foreign exchange market and capital
movements, succeeded in stabilizing the peso. The exchange rate began to
decrease even while the Argentine Central Bank began to recover international
reserves steadily. By the end of 2002, the exchange rate oscillated around
Ps.3.4 per US dollar.

On February 8, 2002, the Argentine Central Bank issued Communique "A" 3471 which
specified that until June 13, 2002, transfers from Argentina to other countries,
made by the financial and non-financial private sector and by certain public
companies, for payment of principal of indebtedness of a financial nature, for
remittance of profits and for distribution of dividends, required the approval
of the Argentine Central Bank. On March 25, 2002, the Argentine Central Bank
issued Communique "A" 3537 that established the requirement of such previous
approval for payments of interest. Communique "A" 3584, issued on April 29,
2002, established that the requirement of an approval from the Argentine Central
Bank for the above mentioned transactions would remain in effect until August
12, 2002 and subsequently, Communique "A" 3688 issued on August 7, 2002,
postponed this date until February 8, 2003.

Controls over the foreign exchange market established in December 3, 2001 were
maintained with certain variations throughout all of 2002. In addition to the
restrictions to transfers of FX abroad, there were limits on the purchase of FX
by individuals and legal entities, minimum terms for the liquidation of exports,
and most exports had to be liquidated with the Argentine Central Bank. Such
controls, which were tightened at the beginning of the second semester of 2002,
together with a significant surplus in the country's trade balance ensured a
fluid supply of foreign currency to the market and determined the appreciation
of the peso in the second half of the year.

In order to prevent the appreciation of the peso that took place principally
during the fourth quarter of 2002, between November 29, 2002 and January 16,
2003, through its Communiques "A" 3826, "A" 3843, "A" 3845, "A" 3859, and "A"
3866, the Argentine Central Bank eased certain of the restrictions imposed over
the foreign exchange market.

Effective January 1, 2003, the Argentine Central Bank authorized the anticipated
payment of imports and extended the maximum period for exporters of capital
goods to liquidate foreign exchange. Likewise, the Argentine Central Bank lifted
restrictions to transfers of foreign exchange abroad to effect payments of
capital in connection with non-financial private sector debts of a financial
nature that had been restructured and in connection with debts that had become
past due for amounts not to exceed US$150,000 per month. Subsequently,
restrictions that had been imposed to the transfer of funds to pay interest on
financial debts, profits and dividends where lifted. In addition, access of
individuals and legal entities to the foreign exchange market was enhanced by
increasing of the monthly purchase amounts authorized from US$100,000 to
US$150,000. Authorized holdings of foreign exchange by financial institutions
were also increased. In addition, at the beginning of January 2003, the
Argentine Central Bank increased from US$200,000 to US$1million the limit over
which exporters had to liquidate foreign exchange with such Central Bank.

In May 2003, the FX market regulations were further relaxed. Effective May 6,
2003, through its Communique "A" 3944, the Argentine Central Bank provided for
an additional easing of restrictions. Among others:

-     the period for exporters of goods and services to liquidate foreign
      exchange was extended from 30 to 90 working days;

-     the obligation for exporters to liquidate FX with the Argentine Central
      Bank was eliminated (previously this obligation had been made applicable
      to amounts over US$1 million);

-     anticipated payment of debts with foreign creditors arising from import
      transactions was authorized independently from the contractual maturity;

-     the previous authorization of the Argentine Central Bank was eliminated
      for transfers of funds abroad for payment of principal of debts of a
      financial nature by financial and non-financial legal entities and local
      governments (in early 2003, this prerequisite had been eliminated for
      transfers of funds abroad related to the payment of interest, profits and
      dividends by all debtors and for the payment of principal of debts of a
      financial nature by non-financial private sector legal entities that had
      restructured their foreign debt) except for financial institutions with
      financial assistance for liquidity reasons from the Argentine Central Bank
      still on their books, that would opt to restructure these liabilities
      under the provisions of Decrees No.739/03 and No.1262/03. See "Argentine
      Banking Regulation--Financial Assistance from the Argentine Central Bank--
      Repayment of the

                                      -95-

<PAGE>

      Financial Assistance Granted Before April 1, 2003." For these
      institutions, including the Bank, the transfer of funds abroad to effect
      payments of principal of debts of a financial nature continues to require
      the previous approval of the Argentine Central Bank, except in the cases
      described in the paragraph above.

-     the limit to acquire FX without authorization from the Argentine Central
      Bank was increased from US$300,000 to US$500,000 per month.

LOANS TO THE PRIVATE SECTOR AND "ASYMMETRIC INDEXATION"

Pursuant to Decree No.214/02, issued February 3, 2002 and complementary rules,
assets and liabilities of the financial system denominated in foreign currency
that had been converted into pesos by the Public Emergency Law were to be
adjusted by a coefficient that would be published monthly by the Argentine
Central Bank and calculated based on changes in the consumer price index, and a
maximum interest rate (assets) and a minimum interest rate (liabilities) would
be applicable to these assets and liabilities. Private sector loans were
pesified at the Ps.1 per US dollar parity. The adjustment coefficient was known
as "coeficiente de estabilizacion de referencia", or the CER. In the case of
loans by financial institutions to the private sector, the adjustment by the CER
coefficient would be retroactively applied beginning 180 days from February 4,
2002. For installment loans, it was established that, for a 6-month period
beginning February 4, 2002, debtors would continue to pay, in pesos, an amount
equal to that of the last installment. At the end of such period, the loan would
be reprogrammed and the adjustment by the CER coefficient accumulated in the 6
months would be applied. For the remaining loans, except for credit card
balances, debtors were granted a 6-month waiting period for payment, at the end
of which the amount of the debt would be recalculated by applying the variation
in the CER coefficient of the 6-month period.

Subsequently the majority of financial institutions loans to individuals were
excluded from this adjustment, which was replaced by the CVS. As a result,
financial institutions' liabilities that were pesified and to which indexation
is applicable are adjusted by the CER, while pesified assets are adjusted by one
of the two coefficients. These situation is know as "asymmetrical indexation".

Decrees No.762/02 (of May 7, 2002) and No.1,242/02 (of July 15, 2002) excluded
from adjustment by the CER coefficient the following loans originally convened
in US dollars and pesified: i) loans secured by residential mortgages on
property representing a borrower's sole family residence, without limitation of
amount; ii) personal loans up to US$12,000; and iii) personal loans secured by a
pledge up to Ps. or US$30,000. These loans would be adjusted beginning October
1, 2002 by the CVS. Until then, the loan conditions applicable would be those as
of February 2, 2002.

Subsequently, Law 25,642 sanctioned on September 11, 2002, postponed the
application of the CER coefficient to September 30, 2002, for all obligations of
individuals or companies to give amounts of money of up to Ps.400,000. In the
case of debtors with the financial system, this amount had to be considered
taking into account the indebtedness with the whole financial system.

On November 28, 2002, Congress sanctioned a project of a law that was regulated
by Decree No.44/03 published in the Official Gazette on January 9, 2003. Law
No.25,713, as regulated by such Decree, defined the methodology for the
calculation of the CER coefficient and ratified the applicability of the CER
adjustment to all obligations to give amounts of money originally denominated in
foreign currency from February 3, 2002. Law No.25,713 maintained the exceptions
established by the previous rules for pledge loans and personal loans. In the
case of loans secured by residential mortgages on the borrower's sole family
residence, the exception was maintained for loans originally convened for up to
US$250,000. The date for the adjustment by the CVS of loans excluded from the
CER adjustment was maintained at October 1, 2002. The new rule also provided
that debtors with obligations not included in the previously mentioned
exceptions and for amounts, as of February 3, 2002 and calculated as the
borrower's total indebtedness with the financial system, of up to Ps.400,000
would be able to capitalize the CER adjustment accrued up to September 30, 2002.
Once the debt is recalculated in such way, the loan has to be restructured so
that the first installment at the moment of the restructuring does not exceed
the last installment paid in accordance with the previous conditions. If the
loan is not an installment loan, the CER adjustment accrued and accumulated up
to September 30, 2002, must be paid in installments throughout a period of not
less than 120 days. At the date of preparation of the Bank's unaudited
consolidated financial statements as of December 31, 2002, Argentine Central
Bank rules regulating the provisions of Law No.25713 were still pending.

                                      -96-

<PAGE>

As established by Decree No.410/02, loans related to foreign-trade transactions
granted by financial institutions and the credit card balances related to
purchases made outside of Argentina remained denominated in US dollars. This
Decree also provided that interbank loans would be converted into pesos at the
Ps.1.4 per US$1 exchange rate.

During most of 2002, outstanding rules limited creditors' ability to exercise
their rights. On January 30, 2002, Law No.25,563 was enacted, which declared a
production and credit emergency generated by the crisis affecting Argentina, to
last until December 10, 2003. Among other measures this Law suspended for 180
days as from the effective date of that Law, all mortgage, pledge and other
foreclosures of whatever origin, including those ordered in chapter 11 type of
reorganization proceedings ("concursos"), whether they be made extra judicially
or in execution of judgment (art.9 and 16). In addition, Law No.25,563 suspended
for 180 days the procedure of bankruptcy ("quiebra") petitions filed (art.11) as
well as all precautionary injunctions attached on property that is necessary for
debtors to continue to carry their usual business and prohibited new ones (art.
16). On May 15, 2002, Law No.25,589 was enacted, which, among other things,
repealed the articles of Law No.25,563 mentioned above and replaced article 16
provisions for the suspension for 180 days from the effective date of this Law
of: i) auctions of real estate property that involve the home of the debtor
and/or the goods and/or facilities used by the debtor in its commercial and/or
productive activities or for the provision of services, ordered in foreclosure
proceedings, in execution of judgments or in extrajudicial executions, and ii)
the execution of precautionary injunctions ordering the dispossession of
property used by commercial, industrial or similar establishments for carrying
out their business activities and necessary for them to operate.

In November 2002, when the above mentioned terms expired, the government reached
an agreement with all financial institutions by which financial institutions
unanimously refrained from carrying out foreclosures until the end of January
2003.

On February 4, 2003, Decree No.204/03 created special emergency units to act as
mediators between borrowers and creditors during a 90-day period beginning on
February 6, 2003, the date of publication of the Decree in the Official Gazette.
These units, that will intervene at the borrower's or the creditor's voluntary
request, will function within the Ministry of Labor and the Ministry of
Production, to intervene in foreclosure proceedings against individuals or small
and medium-sized businesses, respectively. Participation in this mechanism is
voluntary and does not involve the suspension or interruption of judicial
proceedings' terms or of judicial or extrajudicial foreclosures, as regulated by
applicable rules.

On May 8, 2003, Congress approved a new law that suspended foreclosure
proceedings on real estate property constituting the home of debtors for a 90
working-day term beginning on the date of the promulgation of the law, which
occurred on June 3, 2003.

DEPOSITS

Under the terms of Decree No.214/02, deposits in US dollars or other foreign
currencies in financial institutions were compulsively converted into pesos at
the exchange rate of Ps.1.4 per US$1. Based on the provisions of this Decree,
Resolution No.6/02 of the Ministry of Economy established the restructuring of
time deposits in pesos and of deposits originally denominated in US dollars and
converted into pesos, above certain amounts. These measures were known as the
"corralon". This rule established that restructured deposits would be reimbursed
in accordance with the following schedule:

-     time deposits in pesos of amounts up to Ps.10,000: 4 monthly equal
      payments beginning in March 2002; of more than Ps.10,000 and up to
      Ps.30,000: 12 monthly equal payments beginning in August 2002; of more
      than Ps.30,000: 24 monthly equal payments beginning in December 2003.

-     Restructured deposits originally in dollars up to Ps.7,000: 12 monthly
      equal payments beginning in January 2003; of more than Ps.7,000 and up to
      Ps.14,000: 12 monthly equal payments beginning on March 2003; of more than
      Ps.14,000 and up to Ps.42,000: 18 monthly equal payments beginning in June
      2003; of more than Ps.42,000: 24 monthly equal payments beginning in
      September 2003.

                                      -97-

<PAGE>

Non restructured amounts in dollar-denominated deposits accounts were allowed to
be transferred to peso-denominated demand accounts. Decree No.214/02 also
amended the "corralito" to allow for the entire withdrawal of salaries and
pensions in cash and other exceptions.

The "corralito" and the mandatory restructuring of time deposits were meant to
shield banks from further massive withdrawal of deposits. However, the financial
system's deposit levels continued to diminish, despite the enforcement of the
"corralito". One of the reasons for the continued reduction in the financial
system's deposit levels was the increased access to funds in demand accounts
that was permitted by Decree No.214/02 and the subsequent withdrawal of all such
funds by depositors in the context of the prevailing lack of confidence in the
financial system.

The other factor, that became increasingly important since March 2002, was the
increase in the number of successful injunctions ("amparos") obtained by
depositors requiring banks to release deposits. Even though the Executive Branch
continued to enforce the "corralito", injunctions obtained by depositors
resulted in a significant decrease in the financial system's deposits. Several
other factors also contributed to this fund outflow, among which the most
relevant were the uncertainty generated by the lack of an agreement between the
Argentine government and the IMF and the growing expectations of a compulsory
exchange of restructured time deposits for new bonds to be issued by the
government.

During March and April 2002, due to the fact that outflows from the financial
system were used to purchase foreign currency, the exchange rate began to
increase from values of around Ps.2 per US$1 at the end of February, to values
of around Ps.3 per US$1 or higher. In order to prevent additional deposit
withdrawals from the financial system, which had a negative impact on the
exchange rate level and, at the same time, on domestic prices, the government
declared, on April 19, 2002, a new banking and foreign-exchange market holiday
that lasted until April, 29, 2001.

The government's economic team intended to use the holiday to submit to Congress
a bill providing for the mandatory conversion of restructured deposits into
government bonds and other measures required by the IMF. None of these measures
obtained support from Congress. This, together with rumors of changes in the
foreign-exchange policy, triggered the resignation of the Minister of Economy,
Mr. Remes Lenicov, and lead to a new institutional crisis. The crisis was
overcome by the support that provincial governors gave to president Duhalde and
a new Minister of Economy was designated. The new Minister, Mr. Roberto Lavagna,
supported the foreign-exchange policy applied by his predecessor and
consideration by Congress of a mandatory conversion of deposits into government
bonds was suspended. In order to restrict fund outflows from the financial
system, Law No.25,587 was passed on April 25, 2002, that requires banks to
release deposits only when injunctions have been issued pursuant to final
non-appealable judicial decisions.

Enforcement of this Law limited bank losses of deposits due to legal actions,
but did not eliminated it. Banks continued to reimburse restructured deposits to
its holders pursuant to such judicial actions. A substantial amount of these
payments is still pending. In addition, a substantial portion of these payments
had to be made at exchange rates higher than the Ps.1.4 per US$1 exchange rate
at which the pesification was enforced.

In an attempt to solve the problem represented by the need to eliminate the
"corralito" and by the reimbursement of restructured deposits, even under the
terms of the restructuring schedule, Minister Lavagna replaced the compulsory
exchange of deposits for government bonds proposed by his predecessor for a
voluntary exchange (known as "Canje I") and the possibility for holders of bonds
delivered at the exchange and of restructured deposits not tendered in the
exchange to use such bonds and deposits in a series of transactions. On June 1,
2002, through Decree No.905/02, among other measures, the government established
a voluntary exchange of restructured deposits and demand deposits into different
bonds that would be issued by the government.

Decree No.905/02 established a mechanism pursuant to which any holder of
restructured deposits and demand deposits, as well as all of those depositors
that had participated in the voluntary exchange regime previously established by
Decree No.494/02, were initially given a 30-day option to exchange their
deposits for new Argentine government bonds the terms of which are set forth in
Decree No.905/02. Decree No. 905/02 defined a peso-denominated bond maturing
2007 (Boden 2007) and two dollar-denominated bonds, one maturing 2005 and the
other in 2012 (Boden 2005 and Boden 2012), as the options to be offered to
depositors that chose to participate in the swap. The period to exercise the
options described expired in mid July.

                                      -98-

<PAGE>

Decree No.905/02 established that subscription by financial institutions of the
government bonds to be offered to depositors had to be carried in cash, obtained
through advances to be granted to them by the Argentine Central Bank. These
advances had to be fully secured by public and private sector debt instruments
held by financial institutions, in accordance with the provisions of article 15
of Decree No.905/02 (that established assets included and their order of
preference), except in the case of Boden 2012, which had to be acquired in the
first place by delivering 9% National Government Bonds maturing 2002 ("Bonos
Encaje"). In accordance with Decree No.905/02 such advances would have the same
terms as the bonds to be subscribed with the funds provided by them.

In addition, Decree No. 905/02 established that non-exchanged restructured
deposits would remain under the repayment schedule defined by Resolution No.6/02
of the Ministry of Economy as amended, but would be registered with Caja de
Valores S.A. and constitute publicly negotiable securities listed in
self-regulated exchanges of the country. Holders of certificates of restructured
deposits (known as "CEDROs") would be able to subscribe primary issues of equity
and debt securities authorized to be publicly offered by the CNV and authorized
to be listed by an exchange. Decree No. 905/02 also established the possibility
of using restructured deposits to repay those loans granted by the same
financial institution where the deposits were held.

Due to the success of the Canje I, the economic team decided to extend the
possibilities offered by the voluntary exchange regime, which it favors as the
solution to the "corralito", and the reimbursement of restructured deposits.

Through Decree No.1836/02 dated September 16, 2002, that was regulated by
Argentine Central Bank's Communique "A" 3740, the government announced a new
exchange (known as "Canje II") of deposits for government bonds and the
possibility for holders of restructured deposits outstanding as of May 31, 2002,
of up to Ps.7,000 (excluding the CER adjustment), to exchange them for cash.
Financial institutions were allowed to extend this possibility to holders of
restructured deposits of up to Ps.10,000 (excluding the CER adjustment). The
period to receive cash was initially set to expire on October 30, 2002, and was
subsequently postponed up to and including November 21, 2002.

This new exchange contemplated different options for holders of CEDROs or
depositors that might have participated in the previous exchange of deposits for
government bonds implemented by the government. The period to exercise these
options was initially set to expire on October 30, 2002, and was postponed up to
and including December 12, 2002 and, subsequently, up to and including March 12,
2003. On March 11, 2003, Resolution No.146/03 of the Ministry of Economy
postponed the closing date of the Canje II by 90 working days from the date
previously established, until May 23, 2003.

Decree No.1836/02 opened the possibility for financial institutions to acquire
the government bonds to be delivered to depositors, in exchange for secured
loans and the other public sector debt instruments held by financial
institutions included in art.15 of Decree No.905/02, with the preference there
established. The possibility of acquiring the government bonds to be delivered
to depositors through advances granted by the Argentine Central Bank secured by
the assets mentioned in the previous sentence was maintained, and the
possibility of acquiring such bonds in cash was added in those cases were the
amount of bonds to be delivered to depositors by a bank exceeds such bank's
holdings of assets eligible to be exchanged for bonds or given as collateral of
advances.

In addition, Decree No.1836/02 allowed financial institutions to offer
dollar-denominated government bonds maturing in 2006 to depositors having
initiated judicial actions pending resolution, to recover their deposits.
Acceptance of such bonds is voluntary.

Given the favorable trend shown during the second half of 2002 by the financial
system's deposit base, through its Resolution No.668/02 and effective December
2, 2002, the Ministry of Economy eliminated the restrictions still in force on
the amounts that depositors were allowed to withdraw in cash from transactional
deposit accounts (current and savings accounts). These accounts were
incorporated to the free account system established by article 26 of Decree
No.905/02. These measures meant the lifting of the "corralito."

On March 5, 2003, the Argentine Supreme Court (the "Supreme Court") ruled on the
lawsuit of the Province of San Luis against the Argentine National Government,
concerning the claim of the reimbursement, in dollars or in pesos for an amount
equivalent to the dollar amount at the free exchange rate, of a pesified
dollar-denominated deposit that the Province of San Luis holds at Banco Nacion.
In its ruling, the Supreme Court declared art. 2 of Decree

                                      -99-

<PAGE>

No.214/02 unconstitutional (the article that had pesified the dollar-denominated
deposits outstanding in the Argentine financial system) and ordered Banco Nacion
to reimburse the Province of San Luis' deposit in dollars or in pesos for an
amount equivalent to the dollar amount at the free exchange rate. In its ruling,
the Supreme Court established a 60-day term for the parties to convene or
determine the manner and the terms of the reimbursement of the deposit. The
parties have not reached an agreement within the established period. Therefore,
the issue will be resolved by the Supreme Court, which is pending at the date
hereof.

Continuing with the progressive freeing of restructured deposits ("corralon"),
through Decree No.739/03 of April 1, 2003, regulated by Argentine Central Bank's
Communique "A"3919, the Argentine government offered holders of such deposits
the possibility to request from financial institutions and the National
Government, the reimbursement of their deposits, on conditions that varied
depending on the amount of the deposit and its original currency of
denomination. The period to exercise the options contemplated began on April 8
and ended on May 23, 2003.

For deposits originally constituted in dollars for up to US$30,000 (or $42,000),
Decree No.739/03 established that financial institutions would constitute a
demand deposit for the original amount adjusted by the CER and interests as of
April 1, 2003. For deposits originally constituted in pesos, deposit holders
could request financial institutions to credit the technical value of their
CEDROs as of the payment date in a demand account.

For deposits dollar-denominated in origin of greater amounts, Decree No.739/03
established that, for the amount adjusted in the same way as described in the
preceding paragraph, financial institutions would constitute a time deposit
maturing in 90 or 120 days depending on the deposit amount. In all three cases
the difference between the nominal amount of the deposit principal adjusted by
the CER and the equivalent in pesos of the original dollar amount of the deposit
at the reference exchange rate informed by the Argentine Central Bank as of
April 1, 2003 ($2.979 per US dollar) will be repaid by the National Government
through the delivery of "National Government Bonds in Dollars Maturing 2013"
(Boden 2013).

COMPENSATION TO FINANCIAL INSTITUTIONS

For the "Asymmetric Pesification" and its Consequences

As provided for by Decrees No.214/02, No.320/02, No.410/02, No.471/02,
No.704/02, No.905/02 and No.992/02 and complementary ones, as amended, and
Argentine Central Bank Communiques "A" 3467, 3507, 3561 and 3648 and
complementary ones, as amended, a significant portion of financial institutions'
assets and liabilities denominated in foreign currency, which formed part of its
net asset positions in foreign currency were converted into pesos at different
exchange rates.

Decree No.214/02 provided for the compensation, through the issuance by the
government of a bond to be delivered to financial institutions, of the losses
that financial institutions would otherwise suffer as a result of the conversion
of bank assets and liabilities into pesos at different exchange rates and the
short foreign currency positions that would result from such conversion. Decree
No.494/02 provided a methodology for the calculation of the amount of
compensation and established that the government objective in providing such
compensation was to cause financial institutions' net worth to return to the
levels prior to the pesification, by compensating them for:

-     the losses caused by the conversion into pesos of a significant portion of
      their liabilities at the Ps.1.4 per US$1 exchange rate, greater than the
      Ps.1 per US$1 exchange rate established for the conversion into pesos of a
      significant portion of its dollar-denominated assets. This would be
      achieved through the issuance and delivery of a peso-denominated
      compensatory bond maturing 2007 (Boden 2007).

-     the currency mismatch generated by the compulsory pesification of certain
      portions of financial institutions' assets and liabilities. This would be
      achieved through the conversion of the compensatory bond originally
      peso-denominated into a dollar-denominated compensatory bond and, if
      necessary, through the subscription of a dollar-denominated hedge bond.
      For this, the government established the issuance of a dollar-denominated
      bond bearing Libor and maturing in 2012 (Boden 2012).

                                     -100-

<PAGE>

On June 1, 2002, the Argentine government passed Decree No.905/02 that, among
others, replaced the provisions of Decree No.494/02 related to the methodology
by which to calculate the amount of compensation to be received by financial
institutions. Decree No.905/02 provided that the compensation to which a
financial institution was entitled to would be calculated by taking into account
the imbalances generated by the government's pesification measures in the
balance sheet of such financial institution's headquarters and branches located
in Argentina as of December 31, 2001, only, limiting the provision of
compensation on account of imbalances generated in the balance sheets of such
institution's foreign branches and subsidiaries and local subsidiaries with
complementary activities, exclusively to the effects of the conversion into
pesos of such foreign branches' and subsidiaries' investments in secured loans.
Therefore, the negative impact of the pesification of the assets of a bank's
foreign branches and subsidiaries and local subsidiaries with complementary
activities subject to Argentine Law, remained excluded from the compensation
scope. On October 28, 2002, the government issued Decree No.2167/02 which
modified Article 29 of Decree No.905/02 by incorporating into the calculation of
the compensation amounts those assets and liabilities recorded in foreign
branches and subsidiaries which were subject to the provisions of Decree
No.214/02 and complementary ones. Decree No.2167/02 did not contemplate any
changes with respect to the assets of subsidiaries with complementary activity.

Through its Communiques "A" 3805 and "A" 3825, the Argentine Central Bank
regulated the changes introduced by Decree No.2167/02 and established that no
later than December 23, 2002, financial institutions had to inform the Central
Bank of the amounts of compensation to which they were entitled under the new
rules.

For the "Asymmetric Indexation" and Legal Actions Related to the Reimbursement
of Deposits

Financial institutions have requested to the government that they be compensated
for the losses generated to them by other economic policy measures or facts such
as: i) the reimbursement of deposits pursuant to judicial orders ("amparos") at
the free market exchange rate, which was greater than that established by the
government for the conversion into pesos of included financial institutions'
assets and liabilities, and ii) the adjustment for inflation of included assets
and liabilities by using different coefficients, the CER or the CVS ("asymmetric
indexation"). At the date hereof, the authorities have not announced any
measures to compensate these issues.

Currently, a law project is at the consideration of Congress that contemplates
to compensate financial institutions for the effects of the economic policy
measures or circumstances generated by the measures described in the paragraph
above. At the date hereof this project remains under discussion by Congress.

The Bank has retained its rights to make claims, at suitable times, for the
negative effects on its financial condition caused by these measures.

See "--Argentine Banking Regulation--Legal Actions Related to the Reimbursement
of Deposits."

FINANCIAL STATEMENTS' ADJUSTMENT FOR INFLATION

Argentine Central Bank's Communique "A" 3702, Resolution No.240/02 of the FACPCE
and Resolution No.415/02 from the National Securities Commission established
that banks' financial statements for periods ended in 2002 would be restated for
inflation by using the wholesale price index published by INDEC.

The reestablishment of the adjustment of financial statements for inflation has
had a significant adverse effect on financial institutions' results of
operations during most of 2002. This was a consequence of the fact that, given
the conversion into pesos of the different assets held by banks and the changes
to their terms and conditions mandated by different government rules (public
sector debt instruments and loans to the private sector) that established the
adjustment of principal of pesified assets and liabilities by the CER or the CVS
and the accrual of maximum and minimum interest rates, a bank's liquid net worth
(monetary assets less monetary liabilities) was left, to a large extent,
invested in assets that have yielded rates lower than the rate of inflation used
to recognize in income statements the cost of exposure of such liquid net worth
to inflation.

                                     -101-

<PAGE>

In accordance with the provisions of Decree No.664/03, on April 8, 2003, the
Argentine Central Bank established through its Communique "A"3921 that,
beginning on March 1, 2003, financial statements' adjustment for inflation was
to be discontinued.

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.

Due to the crisis environment and to the significant regulatory changes
implemented in 2002, during that year and to the date hereof, several of the
rules and regulations described below have not been fully enforced by the
Argentine Central Bank. This information should be read in conjunction with
"Item 3. Key Information--Risk Factors" and "--Main Regulatory Changes in 2002
and 2003" appearing elsewhere in this annual report.

General

Since 1977, banking activities in Argentina have been regulated under the
Financial Institutions' Law which places the supervision and control of the
Argentine banking system in the hands of the Argentine Central Bank, which is an
autonomous institution. The Argentine Central Bank has vested the
Superintendencia de Entidades Financieras y Cambiarias (Superintendency of
Financial and Exchange Institutions, the "Financial Superintendency") with most
of the Argentine Central Bank's supervisory powers. In this section, unless the
context otherwise requires, references to the Argentine Central Bank shall be
understood as references to the Argentine Central Bank acting through the
Financial Superintendency. The Financial Institutions' Law provides the
Argentine Central Bank with broad access to the accounting systems, books,
correspondence, and other documents of banking institutions. The Argentine
Central Bank regulates the supply of credit and monitors the liquidity of, and
generally supervises the operation of, the Argentine banking system. The
Argentine Central Bank enforces the Financial Institutions' Law and grants
authorization for banks to operate in Argentina. The Financial Institutions' Law
confers numerous powers to the Argentine Central Bank, including the ability to
grant and revoke bank licenses, to authorize the establishment of branches
outside Argentina, to approve bank mergers, capital increases and certain
transfers of stock, to fix minimum capital, liquidity and solvency requirements
and lending limits, to grant certain credit facilities to financial institutions
in cases of temporary liquidity problems and to promulgate other regulations
that further the intent of the Financial Institutions' Law.

Current regulations place the operation of local and foreign owned banks on
equal regulatory terms.

The Emergency Law sanctioned on February 6, 2002 introduced substantial
amendments to the Argentine Central Bank's charter which, among others, released
certain restrictions on its ability to act as a lender of last resort, allowed
the Argentine Central Bank to make advances to the national government for up to
10% of the cash funds obtained during the preceding 12 months (which before
could only be effected by purchasing at market prices negotiable securities
issued by the National Treasury) and released the restriction whereby up to one
third of the freely available international reserves could be composed of
government securities considered at market values.

Decree No. 32/01 established the creation of the Bank Liquidity Fund, in order
to supply liquidity to the banking sector and with the ability to: extend loans
to financial entities, acquire assets from those entities, and subscribe and pay
corporate bonds. This fund is managed by Sedesa, who is the fund's fiduciary.
The fund has a five-year existence. Financial would build up the fund through
the subscription of certificates Class A, for a proportion of the daily average
balance (in pesos and dollars) deposited in each financial entity in November
2001. Presently, the Argentine Central Bank's Communique "A" 3582 has set at 0%
the contribution to the fund.

SUPERVISION

As supervisor of the Argentine financial system, the Argentine Central Bank
requires financial institutions to submit information on a daily, monthly,
quarterly, semi-annual and annual basis. These reports that include balance
sheets and income statements, information relating to reserve funds, use of
deposits, portfolio quality (including details on debtors

                                     -102-

<PAGE>

and any loan-loss provision established) and other pertinent information, allow
the Argentine Central Bank to monitor financial institutions' financial
condition and business practices.

In order to exercise supervision, the Argentine Central Bank requires financial
institutions to submit certain information, including the following:

-     monthly consolidated financial statements of the financial institution,
      its local and foreign branches and its "material subsidiaries";

-     quarterly and annual consolidated financial statements of the financial
      institution, its local and foreign branches, its "subsidiaries," material
      subsidiaries of material subsidiaries, those "associated institutions"
      determined by the Argentine Central Bank and companies not mentioned above
      but elected by the financial institution to be consolidated with the prior
      approval of the Argentine Central Bank;

-     a detailed list, at June 30 and December 31 of each year, of local and
      foreign companies "related" either to the directors of the financial
      institution or to holders of at least 5.0% of the financial institution's
      capital stock or its voting stock; and

-     consolidated semiannual financial statements of the economic group
      comprising the controlling shareholders or controlling group of the
      financial institution, except where the controlling shareholders are local
      financial institutions or foreign financial institutions subject to a
      consolidated supervision regime in the country of origin.

The Argentine Central Bank carries out formal inspections from time to time of
all banking institutions for purposes of monitoring compliance by banks with
legal and regulatory requirements. If the Argentine Central Bank rules are
breached, it may impose various sanctions depending on the gravity of the
violation. These sanctions range from calling attention to the infraction to the
imposition of fines or even the revocation of the financial institution's
operating license. Moreover, non-compliance with certain rules may result in the
obligatory presentation to the Argentine Central Bank of specific adequacy or
regularization plans. The Argentine Central Bank must approve these plans in
order for the financial institution to remain in business.

Financial institutions have been subject to the supervision of the Argentine
Central Bank on a consolidated basis since 1994. The Argentine Central Bank
requires financial entities (i) to consolidate their quarterly and annual
financial statements with all corporate and financial entities in its economic
group; and (ii) to prepare consolidated semi-annual financial statements for its
economic group, unless the company or financial entity controlling the economic
group is required to prepare audited consolidated financial statements in the
country in which it is incorporated. Information set out in "--Limitations on
Types of Business", "--Capital Adequacy Requirements", "--Lending Limits" and
"--Loan Classification System and Loan Loss Provisions" relating to a bank's
loan portfolio, are calculated on a consolidated basis. However, regulations
relating to a bank's deposits are not based on consolidated information, but on
such bank's deposits in Argentina (for example, liquidity requirements and
contributions to the deposit insurance system).

Due to the significant impact of the crisis that unfolded in Argentina since
December 2001, in 2002 the Argentine Central Bank suspended the requirement of
submission of certain information or changed or postponed the filing dates
prescribed by the information regime to which financial institutions were
subject. In particular, presentation of information and compliance with minimum
capital requirements continues to be suspended, while a new regime was defined
by the Argentine Central Bank but without specification of effective dates. See
the "--Capital Adequacy Requirements" section below.

FINANCIAL SYSTEM'S RESTRUCTURING UNIT ("UNIDAD DE REESTRUCTURACION DEL SISTEMA
FINANCIERO" OR "URSF")

Decree No.1262/03 of April 1, 2003, created the Financial System's Restructuring
Unit, comprised of three members appointed by the Ministry of Economy and three
members appointed by the Argentine Central Bank to decide on the strategy to be
followed and the measures to be taken in order to restructure the Argentine
financial system, including the conditions under which financial institutions
will repay the financial assistance granted by the Argentine Central Bank in
accordance with art.17 of its Charter.

                                     -103-

<PAGE>

A specific task of the Argentine Central Bank in the financial system's
restructuring process currently in place will be to provide the rules and the
prudential regulations under which the financial system will operate in the new
post-convertibility monetary and foreign exchange system, which is currently
being shaped, as described below. This process is still in progress, to a large
extent, given that 2002 was mainly an emergency period.

EXAMINATION BY THE ARGENTINE CENTRAL BANK

Accordingly, the Argentine Central Bank established the "CAMEL" quality rating
system which is based on weighting consistent and comparable criteria,
creditworthiness, compliance with the Financial Institutions' Law,
administrative order and the general operating solvency of a financial
institution. Each letter of the CAMEL system corresponds to the following areas
of the operations of each bank being rated: "C" represents capital, "A"
represents assets, "M" represents management, "E" represents earnings, and "L"
represents liquidity. Each factor is evaluated and rated on a scale from 1 to 5,
1 being the highest rating an entity can receive. By combining the individual
factors that are under evaluation, a combined index can be obtained that
represents the final rating for the financial institution.

The rating a bank receives from the CAMEL system can be used by the Argentine
Central Bank in making decisions, such as determining the levels of minimum
capital or the amount of contributions a bank is required to make to the
insurance guarantee system. The Argentine Central Bank begun to rate each
Argentine financial institution based on the results of a periodic examination
conducted by the Financial Superintendency, in accordance with the CAMEL system,
in October 1994. The last examination to Banco Galicia was carried based on
information as of September 30, 2000 and the rating obtained, informed to the
Bank on October 15, 2001 was the highest, as had occurred in the previous years.

BASIC SYSTEM

The Argentine Central Bank established a control system ("BASIC") which requires
all financial entities to comply with a set of procedures concerning the
operations of such financial entities with the purpose of allowing the public
access to a greater level of information and safety with respect to their
holdings in the Argentine financial system. Each letter of the BASIC system
corresponds to one of the following procedures:

B ("Bonos" or Bonds). The Argentine Central Bank required that, on an annual
basis, all financial institutions in Argentina engage in certain transactions
(such as the issuance of debt in a country that is both a member of the OECD and
has a sovereign debt rating of "AAA" or the issuance of debt to an Argentine
financial entity that is in compliance with the alternative procedure described)
in order to expose them to scrutiny and analysis by third parties with high
standards. Since the adoption of this requirement, the Bank has always been in
compliance with it. The requirement was repealed by means of Argentine Central
Bank Communique "A" 3498 effective March 1, 2002.

A ("Auditoria" or Audit). The Argentine Central Bank requires a set of audit
procedures that include:

(a) the creation of a registry of auditors; (b) the implementation of strict
accounting procedures to be complied with by 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 disclosures by the financial entities to both
the Financial Superintendency and the public.

S ("Supervision" or Supervision). The Argentine Central Bank reserves the right
to inspect financial entities from time to time.

I ("Informacion" or Information). The Argentine Central Bank requires financial
entities to disclose on a monthly basis certain daily, weekly, monthly and
quarterly statistical information.

C ("Calificacion" or Rating). The Argentine Central Bank established a system
requiring periodic credit evaluation by internationally recognized rating
agencies, which was suspended by Communique "A"3601 of May 2002.

                                     -104-

<PAGE>

LEGAL RESERVE

The Argentine Central Bank requires that banks allocate each year to a legal
reserve a percentage of net income set by the Argentine Central Bank, which is
currently 20.0%. Such reserve can only be used during periods in which a bank
has incurred losses and has exhausted all allowances and other provisions.
Dividends may not be paid if the legal reserve has been impaired.

LIMITATIONS ON TYPES OF BUSINESS

As provided by the Financial Institutions' Law, commercial banks are authorized
to conduct all activities and operations that are not specifically prohibited by
law or by regulations of the Argentine Central Bank. Some of the activities
which are permitted include the ability to make and receive loans; to receive
deposits from the public in both local and foreign currency; to guarantee
customers' debts; to acquire, place or negotiate stock or debt securities in the
Argentine OTC Market, subject to the prior approval of the National Securities
Commission (Comision Nacional de Valores, the "CNV"); to conduct transactions in
foreign currency; to act as fiduciary; and to issue credit cards.

Banks are not permitted to own commercial, industrial, agricultural and other
types of businesses, except with prior authorization from the Argentine Central
Bank. Under Argentine Central Bank regulations, the aggregate amount of equity
investments of a commercial bank (including participations in domestic mutual
funds called "fondos comunes de inversion") may not exceed 50% of such bank's
Adjusted Shareholders' Equity or Computable Regulatory Capital (as defined
below). In addition, investment in:

-     unlisted equity shares excluding (a) stock of companies which provide
      services complementary to the services offered by the bank, and (b)
      certain stock participations which are necessary in order to obtain the
      rendering of public services, if any,

-     listed stock and participations in mutual funds which are not included in
      order to determine the capital requirements related to market risk; and

-     listed stock that does not have a "largely publicly available" market
      price (when daily quotes of relevant transactions are available, which
      quotes would not be significantly affected by the disposition of the
      bank's holdings of such stock)

may not exceed, in the aggregate, 15% of a bank's Adjusted Shareholders' Equity.

"Adjusted Shareholders' Equity" or "Computable Regulatory Capital" is defined
under the Argentine Central Bank's regulations as the so-called (a) "basic"
shareholders' equity or "core capital", which includes capital stock, capital
adjustments, reserves, uncapitalized irrevocable capital contributions, audited
retained earnings and, pursuant to the consolidated supervision regime, third
party holdings; plus (b) the so-called "complementary" shareholders' equity
which includes certain subordinated debt securities, a portion of the allowances
required by the Argentine Central Bank in respect of loans classified Normal and
Normal Performance (as such terms are defined in "Interest Rate Sensitivty of
Outstanding Loans as of December 31, 2002--Argentine Central Bank's Loan
Classification and Loan Loss Provisions") plus certain unaudited net income and
less certain items such as permanent investments in other financial
institutions, capital assigned to offshore branches, certain intangible assets
and nonintegrated capital.

Nevertheless, for purposes of calculating the limits described both above and in
"--Lending Limits," it is not necessary to deduct the capital assigned to
offshore branches from a bank's shareholders' equity.

Under Argentine Central Bank regulations, financial institutions are typically
precluded from engaging directly in insurance activities and from holding an
equity interest in excess of 12.5% of the outstanding capital of a company that
does not provide services complementary to those provided by financial
institutions or which exceeds specified percentages of the respective financial
institution's Adjusted Shareholders' Equity as described above. The Argentine
Central Bank determines which services are complementary to the services
provided by financial institutions.

Through Communique "A"3918 the Argentine Central Bank established that beginning
April 1, 2003 and until December 31, 2003, financial institutions will be
allowed to receive in payment of credits granted shares or equity participations
in the capital of a company with activities other than complementary activities,
not exceeding 20% of the capital stock or of voting rights, subject to certain
conditions: (i) if the incorporation implies the acquisition of control, a plan
must be presented to the Argentine Central Bank in no less than 90 days from
such incorporation, in order to dispose of the interest, which shall not exceed
12.5% in a one-year period (the Financial Superintendency can authorize

                                     -105-

<PAGE>

an extension of this period), (ii) if the incorporation does not imply the
acquisition of control, it shall be reduced to a maximum of 12.5% in a one-year
period. These assets shall be incorporated for the lower of the net amount of
the loan or a valuation based on an audited balance sheet less than 60 days old.
Subsequent positive adjustments shall be accepted by the independent auditor.

LEGAL ACTIONS RELATED TO THE REIMBURSEMENT OF DEPOSITS

Through Communique "A"3916, the Argentine Central Bank admitted the recording of
an asset (an intangible asset) for the difference between the amount paid by
financial institutions pursuant to judicial orders mandating so, and the amount
resulting from the conversion into pesos of the dollar balance of the deposits
reimbursed at the Ps.1.40 per US dollar exchange rate (adjusted by CER and
interest accrued until the date of the reimbursement), establishing also that
the corresponding amount had to be amortized in 60 equal installments, equal and
consecutive beginning April 2003.

The Bank has retained its rights to make claims at suitable times for the
negative effect on its financial condition caused by the reimbursement of
deposits dollar denominated in origin, in dollars or in pesos for the equivalent
amount at the market exchange rate, mandated by court orders or final
judgements, given that compensation of this effect was not included in the
determination of the compensation to financial institutions. The method
contemplated by the Argentine Central Bank in the above mentioned Communique, of
recording a deferred loss does not affect the legitimacy of such rights. To this
effect, the Bank has reserved the corresponding rights.

LEGAL RESERVE REQUIREMENTS

After the crisis of early 1995 (known as the Tequila Crisis) a system of
"minimum liquidity requirements" was created in substitution of the previous
minimum cash reserve requirements. In order to meet the minimum liquidity
requirements, a percentage of a bank's liabilities, depending on the type of
account, and on the remaining maturity of a bank's liabilities had to be
invested in certain specific instruments, so that financial institutions could
obtain a return on the reserves, thus reducing their cost. The types of
permitted instruments were, among others: (1) reverse repurchase agreements with
the Argentine Central Bank; (2) deposits in a liquidity account opened in the
New York branch of Deutsche Bank; (3) foreign high rated instruments covered by
a put option; (4) "stand by" letter of credit, with a minimum of 180 days
outstanding issued in U.S. Dollars by foreign banks, which must have a rating of
"A" or higher by an international credit rating agency admitted by the Argentine
Central Bank; (5) certificates of deposits acquired by the Argentine Central
Bank from foreign banks, and transferred to the bank by the Argentine Central
Bank; etc.

Compliance with the minimum liquidity requirements of a bank was determined in
average for monthly periods. However, the Argentine Central Bank modifies from
time to time this practice depending on monetary policy considerations. The
coverage percentages in force in May 2001 were the following:

<TABLE>
<CAPTION>
Type of Account                                                                                      Reserves
---------------                                                                                      --------
<S>                                                                                                  <C>
Current accounts and other demand deposits.........................................................     18%
Savings accounts...................................................................................     18
Time deposits, acceptances, swaps, negotiable obligations, and credit facilities
      from correspondent banks (other than foreign trade facilities)
less than 60 days..................................................................................     18
from 60 days to 89 days............................................................................     18
from 90 days to 179 days...........................................................................     13
from 180 days to 365 days..........................................................................      8
more than 365 days.................................................................................     --
</TABLE>

Through its Communique "A" 3251, the Argentine Central Bank allowed the "9%
National Government Bond Due 2002" (Bono del Gobierno Nacional 9% con
Vencimiento 2002 or "Bono Encaje") to be included among the financial
instruments eligible to comply with the minimum liquidity requirement
regulation. The Bank subscribed Ps.557 million of this bond.

                                     -106-

<PAGE>

Through its Communique "A"3274, the Argentine Central Bank changed the
regulations for bank reserve requirements, effective June 1, 2001. According to
said Communique, minimum liquidity requirements remained in effect only for
liabilities with a fixed maturity, for which banks continued, as previously
required, to apply a sliding scale of percentage liquidity requirements that
decreased as the remaining maturity of the liability increases. These
percentages were set at 22% for remaining maturities of up to 89 days, 15% for
up to 179 days, 10% for up to 364 days, and 0% for more than one year. In
addition, the regulation established "minimum cash requirements" for demand
deposits (savings accounts, current accounts, and other demand-deposit accounts)
at 15.5%. The assets eligible for compliance with this requirement were cash
held in bank vaults and balances held at the Argentine Central Bank. Through its
Communique "A"3311, the Argentine Central Bank reduced the minimum liquidity
requirements by one percentage point for the July-August 2001 period, and
allowed the inclusion of cash being transported and cash held in custody with
armored-car companies as eligible for compliance with minimum cash requirements.

Beginning June 1, 2001, bank accounts at the Argentine Central Bank started to
be remunerated. The reverse repurchase agreements with the Argentine Central
Bank ceased to be eligible to comply with the minimum liquidity requirements,
given the Argentine Central Bank belief that making bank accounts at the
Argentine Central Bank remunerated would eliminate the need for such operations
to be entered into.

The minimum liquidity requirements and the minimum cash requirements and banks
compliance with the level required continued to be determined in average for
monthly periods.

Due to the systemic liquidity shortage resulting from deposit outflows, which
accelerated during the last quarter of 2001, in December of that year, the
Argentine Central Bank decided to modify the regulations governing liquidity
requirements. The most significant measures were as follows:

-     The period to be considered for the determination of a bank's minimum
      liquidity and cash requirements position was extended to a quarter
      (November 2001 - January 2002).

-     Setting an additional minimum cash requirement when rates paid by
      financial institutions exceeded the survey rate in 100 basic points.

-     Setting an additional 75% minimum cash requirement applicable to the
      monthly average increase of deposits with respect to the balance verified
      as of November 30, 2001.

-     Setting a additional 25% minimum cash requirement applicable to the
      monthly average increase of deposits with respect to the balance verified
      as of January 4, 2002.

-     The reduction of minimum liquidity requirements to 15%, 8% and 3%
      according to the remaining maturity (up to 89 days, 179 days and 364 days,
      respectively) and of minimum cash requirements to 12.5%. The purpose of
      this measure was to grant financial institutions the necessary resources
      in order to take part in the "Bank Liquidity Fund" created by Decree
      N0.32/01 to provide the banking system with sufficient liquidity.

Through Argentine Central Bank's Communique "A" 3328 and "A" 3338, the decrease
of one percentage point for the minimum liquidity requirements was extended for
the months of September and October of 2001. In addition, Communique "A" 3338
increased in three percentage points the minimum cash requirement beginning on
October 1, 2001. Moreover, Argentine Central Bank's Communique No.41.811
determined that the minimum liquidity and cash requirement balances for November
and December 2001 and January 2002, would be computed on a quarterly basis.

By means of Communique "A" 3498, effective March 1, 2002, the Argentine Central
Bank eliminated the minimum liquidity requirements and modified the regulations
addressing minimum cash requirements. The new regulation established, a standard
40% requirement, irrespective of the remaining maturity of obligations, but
excluded deposits that had been restructured, insofar as the maturity of
installments exceeded one year, in which case the applicable minimum cash
requirement was 0%. Communique "A" 3506 established different minimum cash
requirements for deposits made in cash or in funds originated in transfers from
abroad, based on the terms of deposits (up to 13 days: 9%, from 14 days to 29
days: 7%, and more than 30 days: 5%). The additional requirements discussed
above remained.

Compliance with the minimum cash requirements must be accomplished, in the same
currency as the liability that originates the requirement, with cash in bank
vaults, the balances of banks' current accounts at the Argentine Central

                                     -107-

<PAGE>

Bank and the balances of the special escrow accounts held by banks at the
Argentine Central Bank in favor of clearing houses.

Communique "A"3598 as amended established the rules regarding "minimum placement
requirements," effective May 1, 2002. As a result, rules in effect as of
December 31, 2002, regarding legal reserve requirements set forth by the
Argentine Central Bank define "minimum cash requirements" and "minimum fund
placement requirements".

The minimum cash requirements established were at 14% on time deposits and at
22% on demand deposits (deposits in savings accounts and current accounts).
Regulations allowed the "Special Funds former Almafuerte and Mendoza Banks" to
be considered as a lower requirement, as per Resolution No.36/03 of the
Argentine Central Bank. See "Item 5. Operating and Financial Review and
Prospectus--Description of Consolidated Assets and--Description of Consolidated
Liabilities." The assets computable for compliance with this requirement are the
technical cash, which comprises notes and coins in banks' vaults and the
balances of the peso- and dollar-denominated accounts and of the escrow accounts
in favor of the clearing houses held by banks at the Argentine Central Bank.

The "minimum fund placement requirements" amounted to 12% of time deposits and
18% of demand deposits. Certain assets were eligible to comply with this
requirement. Funds were to be applied to (i) credits acquired from or debt
securities or participation certificates issued by financial trusts or other
sums of money applied to those ends obtained in transactions formalized or to be
formalized as from November 26, 1998, related to the restructuring of financial
institutions under the framework of article 35 bis of the Financial Institutions
Law, including possible unpaid balances of participation certificates or debt
securities of such trusts, subscribed before January 31, 2001, (ii) Argentine
Central Bank bills in pesos adjustable by the CER and (iii) holdings of
"National Government Bond at 9% Maturing in 2002." On this respect, the
Argentine Central Bank established a schedule that exhausts the amounts
computable in July 2003. In accordance with Argentine Central Bank regulations,
the Bank complies in excess with this requirement by taking into account the
amount of its holdings of such bond as of June 30, 2002. In case a bank does not
have the necessary assets, the "minimum fund placement requirements" turn into
greater "minimum cash requirements".

Through Communique "A"3917, the Argentine Central Bank reduced the "minimum cash
requirements" and "minimum fund placement requirements" arising from
demand-deposits accounts and time deposits denominated in pesos, applicable
beginning on April 1, 2003. For demand-deposit accounts the minimum cash
requirement decreased from 22% to 18% and the requirement applicable to time
deposits was reduced by 1 percentage point. The minimum fund placement
requirement decreased from 18% to 17% for demand-deposit accounts and from 12%
to 11% for time deposits.

The Bank was in compliance with the legal reserve requirements as of December
31, 2002.

CAPITAL ADEQUACY REQUIREMENTS

Due to the deep changes made during 2002 to the financial system's operations,
which significantly affected the variables to determine the minimum capital
requirements, through its Communiques "A" 3599 and "A"3604 dated May 3 and 9,
2002, respectively, the Argentine Central Bank suspended the submission of this
information by financial institutions.

Until December 31, 2001, Argentine banks had to comply with the minimum capital
requirements established by the Argentine Central Bank, which were based on the
methodology of the Basel Committee on Banking Supervision of the Bank for
International Settlements ("The Basle Committee"). Banks had to comply with
capital requirements both on an unconsolidated basis and on a consolidated basis
with its significant subsidiaries. Until December 31, 2001, the Bank had
complied in excess with the minimum capital requirements. See "--Interest Rate
Sensitivity of Outstanding Loans as of December 31, 2002--Regulatory Capital."

Until December 2001, the Argentine Central Bank rules defined capital
requirements to cover credit risk, market risk and interest rate risk. Lending
to the non-financial public sector and holdings of government securities in
investment accounts had specific and different capital requirements. These
requirements were based on the methodology for addressing credit risk that was
proposed in 1988 by the Basel Committee on Banking Supervision

                                     -108-

<PAGE>

of the Bank for International Settlements. The requirements were also based on
the Basel Committee's 1995 methodology for addressing market risks. In October
1998, the Argentine Central Bank added a minimum capital requirement based on
interest-rate gaps, which took effect in July 1999. Effective July 2000, new
minimum capital requirements were adopted for loans to the non-financial public
sector and securities in investment accounts.

According to Argentine Central Bank regulations outstanding as of December 31,
2001, the minimum capital required to cover credit risk was calculated on the
basis of the Bank's total assets, including memorandum accounts, with the assets
weighted by risk. Financial assets (net of allowances and including 50% of the
1% allowance for loan losses for the performing portfolio) had also to be
adjusted by a sliding scale of ratios (known as "Indicadores de Riesgo" or Risk
Ratios) that were tied to interest rate levels. The minimum capital requirement
effective was 11.5% of total financial assets, adjusted for risk and interest
rate level.

The minimum capital requirement for fixed assets, to which a 100% risk-weighting
applied, was 15.0% for assets acquired prior to June 30, 1993, and 12.5% for
those acquired after that date. Fixed assets consist of miscellaneous
receivables, bank premises and equipment, miscellaneous assets, intangible
assets, and equity investments in unlisted companies. The latter are net of
assets deducted from computable capital, primarily goodwill and equity
investments in financial institutions.

The minimum capital required to cover market risk was a direct function of a
bank's various positions in government securities and other securities recorded
in trading accounts, as well as positions in foreign currencies other than the
US dollar. In this case, risk-weighted assets were calculated by multiplying the
required capital by the reciprocal of the 11.5% requirement.

The capital requirements on loans to the non-financial public sector and debt
securities in investment accounts were calculated according to the modified
duration of the assets involved. The related assets subject to risk were
calculated in the same way as risk-weighed assets related to market risk,
described above.

The total capital ratio is the ratio of computable capital to total
risk-weighted assets. The latter are defined as the sum of risk-weighted assets
related to credit risk, market risk, interest-rate risk, government securities
in investment accounts, and loans to the non-financial public sector.

In the second half of 2001, the Argentine Central Bank modified the regulations
concerning capital requirements. Basically, lower requirements for government
securities in investment accounts and loans to the non-financial public sector
and new, lower weighting ratios tied to interest rate levels of financial assets
("Indicadores de Riesgo" or Risk Ratios) were introduced. In addition Communique
"A" 3366 established a special procedure for the determination of the minimum
capital requirement for the secured loans received in the swap transaction
established by Decree No.1387/01, so that this operation would not generate a
requirement increase.

Through its Communique "A"3959 dated June 2, 2003, the Argentine Central Bank
established a new minimum capital requirements regime for financial
institutions.

The new regime's main features are:

-     an 8% requirement on risk-weighted assets, consistent with the
      international standard set forth by the Basle Committee;

-     equal percentage requirements for financial institutions' exposures to
      private and public sectors' assets;

-     the requirement of increasing capital as a function of loans' interest
      rates was discontinued;

-     an additional requirement was established to cover the risk inherent to
      mismatches between the rate of inflation and market interest rates;

-     the determination of the capital requirements to cover market and
      interest-rate risks, shall incorporate the dollar as well as the
      adjustments by the CER and the CVS;

-     the increase or decrease of the capital requirement depending on the
      rating granted to each institution by the Superintendency of Financial and
      Foreign Exchange Institutions was discontinued;

-     risk weightings will be adjusted to take into account, among others, the
      changes introduced in late March 2003 regarding the treatment of
      public-sector assets.

                                     -109-

<PAGE>

The rule does not specify the date of effectiveness of the new regime or the
period contemplated for financial institutions to reach full compliance. These
will be determined in due time by the Argentine Central Bank.

LENDING LIMITS

The aggregate amount of equity participation and credit, including guarantees
granted, a bank can grant to any credit customer at any time is based on the
bank's Adjusted Shareholders' Equity on the last day of the immediately
preceding month and on the customer's net worth.

According to Argentine Central Bank rules, a commercial bank may not lend or
otherwise extend credit to (referred to herein as "financial assistance") or
participate in the capital stock of a single non-related customer (together with
its affiliates) in amounts in excess of 15% of the bank's Adjusted Shareholders'
Equity or 100% of such customer's net worth. However, a bank may grant
additional financial assistance to such customer up to an amount equal to 10% of
the bank's Adjusted Shareholders' Equity if such additional financial assistance
is secured with certain liquid assets, including public or private debt
securities.

Under Argentine Central Bank regulations, the aggregate amount of investments of
a commercial bank in the stock of third parties, including participation in
certain mutual funds authorized pursuant to Argentine Central Bank regulations,
may not exceed 50.0% of such bank's Adjusted Shareholders' Equity, with the
aggregate amount of such investments on the assets described below being limited
to 15.0% of such Adjusted Shareholders' Equity. Such assets are:

- unlisted stock, excluding (a) stock of companies which provide services
complementary to the services offered by the bank and (b) any stock
participation which is necessary in order to obtain the rendering of public
services;

- listed stock and participations in mutual funds which are not taken into
account in order to determine the market risk related capital requirements
referred to below; and

- listed stock which does not have a "largely publicly available" market price.
Under the regulations, a stock's market price is considered to be "largely
publicly available" 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.

In addition, an equity investment of a commercial bank in another company that
does not provide services complementary to the services provided by the
commercial bank may not exceed 12.5% of such company's net worth.

Total financial assistance that a commercial bank may grant to any particular
borrower and its affiliates are also limited based on the borrower's net worth.
Total financial assistance to any one borrower and its affiliates may not
exceed, in general, 100% of such borrower's net worth, but such limit may be
increased to 200% of the borrower's net worth if such amount does not exceed
2.5% of the bank's Adjusted Shareholders' Equity.

Effective as from October 1, 1995, the Argentine Central Bank requires that
extensions of credit in any form in excess of 2.5% of a bank's Adjusted
Shareholders' Equity must be approved by the relevant branch manager, regional
manager, relevant first line administrative officer of the credit area, general
manager and credit committee, if any, of the bank, as well as by its board of
directors, administration council or similar corporate body.

The Argentine Central Bank regulates loans to a bank's "related parties",
defined as a bank's affiliates and related individuals. For purposes of these
lending limits, "affiliate" means any entity over which a bank, directly or
indirectly, has control, is controlled by, or is under common control with, or
any entity over which a bank has, directly or indirectly, significant influence
with respect to such entity's corporate decisions. "Related individuals" means a
bank's directors, senior management, syndics and such persons' direct relatives.

The Argentine Central Bank limits the amount banks can lend to their related
parties depending on the rating granted to each bank by the Financial
Superintendency. Banks rated 4 or 5 are forbidden to lend to their related
parties. Banks ranked between 1 and 3 cannot extend financial assistance to
their related parties in an amount which exceeds, together

                                     -110-

<PAGE>

with any equity participation held by the bank in its affiliates, 5.0% of such
bank's Adjusted Shareholders' Equity. However, a bank may grant additional
financial assistance to such related parties up to an amount equal to 10.0% of
such bank's Adjusted Shareholders' Equity: (i) if the affiliate provides
complementary services (defined as services in connection with stock brokerage,
issuance of credit or debit or similar cards, financial intermediation in
leasing and factoring transactions) (ii) in the case of temporary acquisition of
shareholdings in companies to facilitate their development in order to sell such
holdings afterwards, (iii) if the affiliate is a local financial institution
rated other than 1 or 2 by the Argentine Central Bank, or (iv) if such
additional financial assistance is secured with certain liquid assets, including
public or private debt securities. If the affiliate is a financial institution
rated 1, the amount of financial assistance can reach 100% of a bank's Adjusted
Shareholders' Equity. If the receiving affiliate financial institution is rated
2, the amount of financial assistance can reach 10% without limitations and an
additional 90% should the term for the loans and other credit facilities not
exceed 180 days.

In addition, the aggregate amount of a bank's equity participation in, and
non-exempted financial assistance to its related parties may not exceed 20.0% of
such bank's Adjusted Shareholders' Equity.

In addition, with respect to Related Persons who are individuals, the total
amount of loans to those Related Persons cannot exceed Ps.50,000, which must be
used exclusively for personal or family purposes. Failure to properly observe
these requirements can result in an increase of the minimum capital requirements
for credit risk in an amount equal to 100% of the daily excess amounts over the
requirements beginning on the month when the excess amounts appear and
continuing while the excess amounts remain.

As of December 31, 2002, the Bank's total assistance to related parties amounted
to Ps.138.8 million, 8.8% of its Shareholders' Equity.

Notwithstanding the limitations described above, the aggregate amount of
non-exempted financial assistance (including equity participations)
independently of whether customers qualify as related parties or not of a bank
as to which such assistance and participation exceeds 10.0% of such bank's
Adjusted Shareholders' Equity, may not exceed three times the bank's Adjusted
Shareholders' Equity excluding financial assistance to domestic financial
institutions, or five times the bank's Adjusted Shareholders' Equity including
financial assistance to domestic financial institutions.

Communique "A"3911 issued on March 28, 2003, established limits to a financial
institution's exposure to the Argentine public sector applicable beginning April
1, 2003. These limits exclude the stock of exposure outstanding as of March 31,
2003, and bonds received as compensation in accordance with Decree No.905/02 or
those to be received pursuant to other regulations. However, beginning April 1,
2003, new financial assistance to the Argentine public sector must be within the
limits established as follows: (i) aggregate exposure to national public sector
debt instruments (including financial assistance to other public sector
jurisdictions secured by the federal tax collection shared with such
jurisdictions) cannot exceed 50% of a bank's regulatory capital or Adjusted
Shareholders' Equity, (ii) aggregate exposure to each provincial jurisdiction
and the City of Buenos Aires (including financial assistance to municipal
jurisdictions secured by the federal tax collection shared with such
jurisdictions but excluding those included in the previous item) may not exceed
10% of a bank's Adjusted Shareholders' Equity and shall be secured by local tax
collection revenues or by a pledge or be instrumented as a leasing transaction,
and (iii) aggregate exposure to each municipal jurisdiction may not exceed 3% of
a bank's Adjusted Shareholders' Equity and must se secured in the same manner.
Total exposure to municipal jurisdictions shall not exceed 15% of a bank's
Adjusted Shareholders' Equity and the total exposure to the public sector,
described in items (i), (ii) and (iii), above, must not exceed 75%. In addition,
beginning January 1, 2006, the average financial assistance to all the public
sector must not exceed 40% of a bank's total assets as of the end of the
previous month. Any excess over this limit will determine an equal increase in
the minimum capital requirement.

LOAN CLASSIFICATION SYSTEM AND LOAN LOSS PROVISIONS

In 1994, the Argentine Central Bank introduced the current loan classification
system and corresponding minimum loan loss provision requirements applicable to
loans and other types of credit (together, referred to as "loans" in this
section) of private sector borrowers.

The current loan classification system is a bifurcated system, applying certain
criteria to classify loans in a bank's "consumer" portfolio, and another set of
criteria to classify loans in its "commercial" portfolio. The loan

                                     -111-

<PAGE>

classification criteria applied to loans in the consumer portfolio are based on
delinquency aging, while the principal criterion of classification of loans in
the commercial portfolio is each borrower's ability to pay, as measured mainly
by such borrower's future cash flow. In the loan classification system, all
customers in an economic group are considered as one borrower. If a customer has
both commercial and consumer loans, consumer loans will be added to commercial
loans to determine eligibility for classification in the consumer portfolio.
Loans backed with preferred guarantees will be considered at 50.0% of their face
value.

Until December 31, 2002, banks could opt to apply the consumer loan
classification criteria to commercial loans of up to Ps.200,000. Through
Communique "A"3918, issued on April 4, 2003, the Argentine Central Bank
established that between March 31, 2003 and December 31, 2003, customers with
debt in the whole financial system of up to Ps.5 million will be classified in
the same manner as consumer loans, that is, they will be automatically
classified according to the number of days the debt is past due. For the
classification, one day past due will be computed for each 3 days elapsed in the
period from December 1, 2001 to March 31, 2003. This treatment will also be
provided to the portfolio of commercial loans of up to Ps.200,000, which under
the previous rules were already automatically classified. The aggregate amount
of net reversal of allowances outstanding as of February 28, 2003, if
corresponding, must be reflected in a specific liability account the balance of
which shall be used for the establishment of new allowances beginning in April
2004.

In applying the Argentine Central Bank's classification to commercial loans,
banks must assess the following factors: management and operating history of the
borrower, present and projected financial situation of the borrower with a
review of the borrower's financial statements, borrower's payment history and
ability to service debt, capability of the borrower's internal information and
control systems to provide accurate and timely financial information, as well as
the general risk of the sector in which the borrower operates and its relative
position within that sector. In this analysis, special consideration must be
provided to the assessment of the customer's exposure to currency risk, taking
into account the customer's income and debt in foreign currency.

A periodic review of the commercial portfolio must be carried out by an
evaluation team independent of banks' loan originating departments, such as the
Bank's internal auditors. Alternatively, the review may be carried out by banks'
line officers pertaining to such departments, subject to supervision independent
from the bank. The evaluation must be carried out on each borrower with
outstanding credit equal to the lesser of Ps.1,000,000 or 1.0% of a bank's
adjusted shareholders' equity, but in any case covering at least 20.0% of the
total loan portfolio. The frequency of the review of each borrower depends on
the bank's exposure to that borrower.

The Argentine Central Bank requires that the larger the exposure is, the more
frequent the review should be. A review is conducted every calendar quarter when
credit exposure to that borrower is equal to or in excess of 5.0% of the Banks'
Adjusted Shareholders' Equity on the last day of the month prior to the review,
or every six months when exposure equals or exceeds to the lesser of
Ps.1,000,000 or 1.0% of the Bank's Adjusted Shareholders' Equity on the last day
of the month prior to review. In any case, at least 50.0% of the Bank's
commercial portfolio must be reviewed by the end of each six months, and all
other borrowers in the Bank's commercial portfolio must be reviewed during the
Bank's fiscal year, such that the entire commercial portfolio is reviewed every
fiscal year.

Reviews must be reevaluated and documented in a borrower's file upon a negative
change in objective criteria such as an increase in days past due, filing for
bankruptcy or protection from creditors, or a judicial proceeding initiated
against the borrower. In addition, a reevaluation will be triggered if any other
financial institution representing at least 10.0% of the borrower's total
outstanding credit downgrades its classification of that borrower, or if an
independent rating agency downgrades its rating of the borrower's debt
securities.

In addition, only one level of discrepancy is permitted between the
classification assigned by a bank and the lowest classification assigned by at
least two other banks whose combined credit to the borrower represents 20.0% or
more of the total credit of the borrower considering all banks. Information on
each bank's classification of its borrowers is expected to be released by the
Argentine Central Bank on a monthly basis. If the Bank's classification differs
by more than one level from the lowest such classification, it must immediately
downgrade its classification of the borrower to the same classification, or
within one classification level. This obligatory reclassification was
discontinued for commercial debtors (including those with debts of up to
Ps.200.000 treated as consumer loans for the purposes of classification)
pursuant to the provisions of Argentine Central Bank's Communique "A"3918 issued
April 4, 2003, for the period between March 31, and December 31, 2003.

                                     -112-

<PAGE>

For a further description of the Argentine Central Bank's loan classification
system and the Argentine Central Bank's minimum loan provision requirements, see
"--Interest Rate Sensitivity of Outstanding Loans as of December 31, 2002
--Argentine Central Bank's Loan Classification and Loan Loss Provisions."

VALUATION OF GOVERNMENT SECURITIES IN INVESTMENT ACCOUNTS

Through its Communique "A"3857, the Argentine Central Bank limited, as from
January 7, 2003, the incorporation of securities to investment accounts to those
outstanding as of December 31, 2002.

Government securities in investment accounts are recorded at their cost value
increased by accruing their internal rate of return over the period elapsed
since the date of inclusion of the securities in the investment account
category. For government securities previously included in trading accounts, the
cost value is their closing market value as of the day before their transfer to
an investment account. In accordance with Argentine Central Bank rules, the
carrying value of investment-account securities must be reduced at each month
end for the positive difference between their book value and their market value
increased by 20%.

Those securities received as compensation for the effects of the "asymmetric
pacification" under the provisions of Decrees No.905/02 and No.2167/02, are
carried at their face value. For these securities, the reduction mentioned in
the preceding paragraph for the difference between book value and market value
increased by 20% is not applicable. See "Item 4. Selected Statistical
Information--Government and Corporate Securities."

VALUATION OF LOANS TO THE PUBLIC SECTOR

In November 2001, the government offered a swap of public-sector debt
instruments for secured loans to the National Government (Decree No,1387/01).
Eligible public-sector debt instruments included both government securities and
loans, which in turn included loans to the provinces and excluded those loans
granted to the latter through the Fiduciary Fund for Provincial Development. In
December 2001, only the swap of national government debt instruments was
completed. Beginning in November 2001, the Bank recorded those loans to the
provinces tendered to the swap in accordance with the terms and conditions of
the new secured loans. This swap reduced public-sector's yields and extended
their maturity but did not modify their currency of denomination.

The rules issued in 2002 compulsorily pesified those assets and modified their
other terms and conditions (maturity, interest rate and principal adjustment).
Decree No.471/02 established that secured loans outstanding as of February 3,
2002 had to be pesified at the Ps.1.40 per US dollar exchange rate, with their
principal adjusted by the CER and fixed annual interest rates ranging from 3% to
5.5% depending on their term. For secured loans representing in origin an
exposure to the Provinces, Decree No.1579/02 of August 28, 2002, introduced an
additional restructuring through the offering of a new swap for Secured Notes or
Loans issued by the FFDP maturing in 16 years, principal adjusted by the CER and
a fixed 2% annual interest rate. The new swap included loans to the FFDP,
excluded from the first swap, and recognized the presentation made to such swap.
The necessary steps concerning the swap of provincial debt were finalized in
March 2003. To date the swap has not been fully completed, as the provincial
legislative bodies are in the process of approving the agreements signed.

Through its Communique "A"3911, the Argentine Central Bank established a new
method for the valuation of secured loans (Decree No.1387/01), government
securities not subject to capital requirements to cover market risk, promissory
notes issued by the FFDP and other loans to the non-financial public sector,
excluding among others, government securities recorded in investment accounts,
compensatory and hedge bonds and Lebac, short-term Argentine Central Bank notes.

Beginning with the financial statements for March 2003, included assets must be
valued at the lower between their technical and present values. To determine
present values, the Argentine Central Bank established a discount rate that
increases over time. Its initial value is 3% per annum, applicable until
December 2003, while beginning in 2007 the applicable rate will be the average
market yield of national-government securities. The technical value is the
balance of each instrument adjusted according to its contractual terms.

                                     -113-

<PAGE>

The difference between the lower of present and technical values, and the book
value as of February 28, 2003 has to be reflected in an asset regularizing
account, for a positive difference, or be charged to income, for a negative one.

FINANCIAL ASSISTANCE FROM THE ARGENTINE CENTRAL BANK

Financial Assistance for Liquidity Reasons Granted Beginning March 10, 2003

Communique "A"3901, issued on March 19, 2003, established an automatic mechanism
to regulate the provision by the Argentine Central Bank to financial
institutions of assistance for liquidity reasons. This mechanism does not apply
to the stock of financial assistance granted for such reasons during the
2001/2002 crisis.

The Argentine Central Bank will consider the applications for financial
assistance when a financial institution's liquidity ratio falls under 25%. The
rule established the method for calculating the maximum financial assistance
allowed as a function of, among others, the amount necessary to bring the
liquidity ratio up to 35%, the deposits loss of the last 30 days, the targets
contemplated for this type of assistance for the applicable month and the
monetary program in effect. Financial assistance will mature in 90 days, that
can be extended for similar periods, and interest will be payable each 30 days.
Prepayment is contemplated in case the liquidity ratio exceeds 35%.

The liquidity ratio is defined as the ratio between (i) the sum of cash, funds
in the current account at the Argentine Central Bank, special escrow accounts
held at the Argentine Central Bank in favor of the clearing houses, other
accounts computable to comply with the minimum cash requirements, funds in
correspondent banks, holdings of Lebac, short-term Argentine Central Bank notes,
and interbank loans granted, and (ii) the sum of demand deposits and 30% of time
deposits (including restructured deposits) maturing within the 10 days following
the date of the request of financial assistance.

Repayment of the Financial Assistance Granted Before April 1, 2003

Through Decree No.739/03, the Argentine government established a voluntary
procedure for the repayment of the financial assistance granted by the Argentine
Central Bank to financial institutions during the crisis that affected the
financial system since 2001. The basic purpose is to harmonize the cash flows of
those financial institutions that are simultaneously debtors (for having
received financial assistance from the Argentine Central Bank) and creditors
(for their holdings of debt instruments) of the public sector.

Art.9 of this Decree established that balances due must be amortized in pesos,
in the same number of installments as those of the assets granted as guarantees
of the financial assistance received, without exceeding 70 monthly installments.
Communique "A"3941 of the Argentine Central Bank established a minimum
cumulative amortization schedule and a monthly repayment of not less than 0.90%
of the adjusted balance. Mandatory accelerated repayment is contemplated when
the interest rate earned by the assets granted as guarantees exceeds 3.5% per
annum as well as voluntary prepayment.

Decree No.739/03 established also that financial assistance subject to this
repayment system shall be guaranteed by the Argentine government secured loans
and, in the absence of the latter, Secured Notes or Loans issued under the
provisions of Decree No.1579/02, or bonds issued under the provisions of Decrees
No.905/02, No.1836/02 and Decree No.739/03. In accordance with Communique
"A"3940 of the Argentine Central Bank, financial institutions that wish to make
use of this special repayment system, shall have received the approval to the
terms and conditions for the restructuring of their foreign debt before December
5, 2003.

Decree No.1262/03 provided that the Argentine Central Bank shall modify the
above mentioned repayment conditions, when the URSF establishes so, subject to
the following conditions: (i) the average life of the assets granted as
guarantees of the financial assistance received exceeds 70 months and (ii) the
financial institution falls under the provisions of art.34 and 35bis of Law
21,526 (Financial Institutions Law) and has adopted a reorganization plan
approved by the URSF. In this case, repayment will be occur in the same number
of installments as that of the assets granted as guarantees of the financial
assistance received with a maximum number of 120 monthly installments and a
monthly amortization of not less than 0.4%.

                                     -114-

<PAGE>

Admitted growth in credit for financial institutions with financial assistance
from the Argentine Central Bank Communique "A"3915 of the Argentine Central Bank
modified the ratios that limit credit growth, increasing most of the ratios that
relate admitted credit growth to the amount of the financial assistance received
from the Argentine Central Bank and to deposit growth.

FOREIGN CURRENCY POSITION

As of the date of this annual report, through Communique "A"3889, the Argentine
Central Bank limited financial institutions' foreign currency exposure based on
such institution's "Global Foreign Currency Net Position" (assets and
liabilities from financial brokerage and securities denominated in foreign
currencies). Beginning May 1, 2003, the absolute value of the "Global Foreign
Currency Net Position" must not exceed 30% of a bank's computable capital or
Adjusted Shareholders' Equity as of the end of the previous month. In the case
of short positions, the limit was set at the lower of 30% of computable capital
or liquid shareholders' equity. For those financial institutions that expected
not to be able to comply with such limits, a period for the presentation of a
compliance plan was provided that expired May 15, 2003.

DEPOSIT INSURANCE SYSTEM

Argentine Law No. 24,485 and Decree No. 540, as amended by Decree No. 1292/96
and Decree No. 1127/98, created a deposit insurance system for bank deposits and
delegated to the Argentine Central Bank the organization and start-up of the
deposit insurance system. The deposit insurance system has been implemented
through the creation of a fund named Fondo de Garantia de los Depositos ("FGD")
which is administered by Sedesa. The shareholders of Sedesa are the Argentine
Government through the Argentine Central Bank, which holds at least one share,
and a trust constituted by the financial institutions authorized by the
Argentine Central Bank which wish to participate in the fund. The Argentine
Central Bank establishes the extent of participation by each institution
proportionally to the resources contributed by each such institution to the FGD
(Communique "A" 2337).

The deposit insurance system that became effective covered all peso and foreign
currency deposits held in demand deposit accounts, savings accounts and time
deposits with a maturity of less than 90 days are insured for an amount up to
Ps.10,000 and all time deposits with a maturity of 90 days or longer are insured
for up to Ps.20,000. In November 1998, the amount of insurance for such deposits
was raised and unified in Ps.30,000 without distinction of maturity dates.
Deposits made after July 1, 1995 with an interest rate 200 basis points above
the interest rate quoted by Banco de la Nacion Argentina for deposits with
equivalent maturities are not covered by this system. This guarantee shall be
made effective within 30 days from the revocation of the license of a financial
institution, subject to the outcome of the exercise by depositors of their
priority rights described under "--Priority Rights of Depositors."

The Argentine Central Bank may modify, at any time, and with general scope, the
sum of the mandatory deposit guarantee insurance according to the consolidation
of the financial system and any other elements that it may deem appropriate.

The Argentine deposit insurance system was financed with monthly contributions
by all financial institutions operating in Argentina, ranging from 0.03% to
0.06% of average peso and foreign currency deposits (and other liabilities
included) held by such financial institution. The Argentine Central Bank may
require financial institutions to advance the payment of up to the equivalent of
two years of monthly contributions and may also require additional contributions
by certain financial institutions, depending on its evaluation of the financial
conditions of such financial institutions. Once the contributions to the FGD
reach the greater of Ps.2 billion or 5.0% of the total deposits of the Argentine
banking system, the Argentine Central Bank may suspend or reduce the monthly
contributions and reinstate them when the contributions decrease from such
level.

Through its Communique "A" 3064, the Argentine Central Bank established that,
beginning January 2000, the monthly contribution banks make to the deposit
insurance system was to be divided into (1) a monthly normal contribution that
would continue to be booked as a financial expenditure, and (2) a monthly loan
to Sedesa. For Galicia, the monthly contribution and the monthly loan amounted
each to 0.015% of deposits and certain other liabilities included. Through its
Communique "A" 3153, the Argentine Central Bank eliminated, beginning September
1, 2000, the contribution through the monthly loan to Sedesa.

                                     -115-

<PAGE>

Through Central Bank's Communique "A" 3358 in November 2001, the percentage for
the FGD contribution was modified. Therefore, financial institutions have to pay
to the FGD the 0.03% of the monthly average of the daily balance of their
deposits, registered two months before. The Argentine Central Bank can require
an anticipated subscription of twenty four (24) contributions, with more than
thirty days of anticipation, to provide for the fund's requirements.

During the January-December 2000, Banco Galicia contributed Ps. 31.7 million to
the FGD. For the period January-December 2001, Banco Galicia contributed Ps.34.1
million to the FGD. For the period January-December 2002, Banco Galicia
contributed Ps 20.2 million to the FGD.

Decree No. 1292/96, enhanced Sedesa's functions to allow it to provide equity
capital or make loans to Argentine financial entities experiencing difficulties
and to institutions which buy such Argentine financial entities or buy the
deposits of such Argentine financial entities. As a result of such decree,
Sedesa has the flexibility to intervene in the restructuring of a financial
entity experiencing difficulties prior to bankruptcy.

PRIORITY RIGHTS OF DEPOSITORS

In case of judicial liquidation or bankruptcy of a financial entity, the holders
of deposits in pesos and foreign currency enjoy a special preferential right to
obtain repayment of their deposits over the sums maintained by the bank as
deposits or minimum reserve requirements and other proceeds specified by the
law. This right to payment is only junior to certain labor claims. The holders
of deposits also enjoy a general preferential right with respect to other assets
of the bank, subject to the prior right of credits secured by mortgages and
pledges and certain labor claims.

FINANCIAL INSTITUTIONS WITH ECONOMIC DIFFICULTIES

The Argentine Financial Institutions' Law establishes that financial
institutions, including commercial banks such as the Bank, which evidence a cash
reserve deficiency, have not abided by certain technical standards, have not
maintained minimum net worth standards, or which solvency or liquidity is deemed
to be impaired by the Argentine Central Bank must submit a restructuring plan (a
"Restructuring Plan") to the Argentine Central Bank. Such Restructuring Plan
must be presented to the Argentine Central Bank on the date specified by the
Argentine Central Bank, which should not be later than 30 calendar days from the
date on which the request is made by the Argentine Central Bank. In order to
facilitate the implementation of a Restructuring Plan, the Argentine Central
Bank is authorized to provide a temporary exemption from compliance with
technical regulations and/or the payment of charges and fines which arise from
such non-compliance.

The Argentine Central Bank may also, in relation to a Restructuring Plan
presented by a financial institution, require such financial institution to
provide guarantees or limit the distribution of profits, and appoint a
supervisor, to oversee such financial institutions' management, with the power
to veto decisions taken by the financial institution's corporate authorities.

In addition, the Argentine Central Bank's charter authorizes the Financial
Superintendency within the Argentine Central Bank, subject only to the approval
of the president of the Argentine Central Bank, to suspend for up to 120 days,
in whole or in part, the operations of a financial entity if its liquidity or
solvency has been adversely affected. During the suspension: (i) there is an
automatic stay of claims, enforcement actions and precautionary measures; (ii)
any commitment increasing the financial institution's liabilities is void and
(iii) acceleration of indebtedness and interest accrual is suspended.

If, in the judgment of the Argentine Central Bank, a financial institution is in
a situation which, under the Financial Institutions' Law, would authorize the
Argentine Central Bank to revoke the financial institution's license to operate
as such, the Argentine Central Bank may, prior to considering such revocation,
order a variety of measures, including (1) taking steps to capitalize or
increase the financial institution's capital; (2) revoking the approval granted
to the shareholders of the financial institution to own an interest therein; (3)
restructuring and/or transferring assets and liabilities; (4) granting of
temporary exemptions to comply with technical regulations and/or pay charges and
fines arising from such defective compliance; or (5) appointing a delegate or
intervenor which may eventually replace the board of directors of the financial
institution.

                                     -116-

<PAGE>

DISSOLUTION AND LIQUIDATION OF FINANCIAL INSTITUTIONS

The Argentine Central Bank must be notified of any decision to dissolve a
financial institution pursuant to the Financial Institutions' Law. The Argentine
Central Bank, in turn, must then notify a court of competent jurisdiction which
will determine who will liquidate the entity: the corporate authorities or an
appointed, independent liquidator. This determination is based on whether or not
sufficient assurances exist which indicate that such corporate authorities are
able to carry out liquidation properly.

Pursuant to the Financial Institutions' Law, the Argentine Central Bank no
longer acts as liquidator of financial institutions. However, when:

- a Restructuring Plan has failed or is not considered viable;

- local and regulatory violations exist; or

- substantial changes have occurred in the entity's condition since the original
authorization was granted, the Argentine Central Bank may decide to revoke a
bank's license to operate as a financial institution. In this case, the law
allows judicial or extrajudicial liquidation as in the case of voluntary
liquidation described in the preceding paragraph. During the liquidation
process, bankruptcy proceedings may be instituted against a bank by a court of
competent jurisdiction or by any creditor of the bank, provided that in certain
cases a waiting period of 60 days will apply.

CAPITAL MARKETS

Pursuant to the Argentine Financial Entities Law, commercial banks are
authorized to underwrite and place both equity and debt securities. There are
currently no statutory limitations as to the amount of securities a bank may
commit to underwrite. However, the underwriting of securities by a bank would be
treated as "credit assistance" and, accordingly, until the time the securities
are placed with third parties, such underwriting would be subject to the
limitations discussed under " -- Lending Limits" above.

Commercial banks are authorized to trade equity and debt securities on the
Argentine Over-The-Counter ("OTC") Market if they are registered with the CNV as
OTC brokers (agentes de mercado abierto). In its capacity as OTC broker, a
commercial bank will be subject to the supervision of the CNV and, as a result,
must comply with certain reporting requirements.

Since 1990, the Buenos Aires Stock Market ("Mercado de Valores de Buenos
Aires"), an association of securities brokers which oversees, among other
things, its members as well as the transactions carried out by them at the
Buenos Aires Stock Exchange (BASE), has authorized brokerage firms organized as
sole-purpose corporations (sociedades de bolsa) to operate as securities brokers
at the BASE in addition to individuals. There are currently no restrictions for
a commercial bank to own a sociedad de bolsa and, in fact, most of the principal
commercial banks operating in Argentina have already established their own
sociedad de bolsa. All brokers (individuals or firms) are required to purchase
at least one share of the Buenos Aires Stock Market, as a condition for
admittance to operate as a securities' broker at the BASE.

An agreement, dated May 3, 1993, between the Buenos Aires Stock Exchange and
representatives of the dealers in the OTC Market provides that trading in equity
and equity-related securities will be conducted exclusively on the Buenos Aires
Stock Exchange and that all corporate debt securities listed on the BASE may
also be traded on the OTC Market. Trading in Argentine government securities,
which are not covered by the agreement, is conducted principally in the OTC
Market. The agreement does not extend to other Argentine exchanges.

Commercial banks may operate as both managers and depositaries of Argentine
mutual funds provided that a bank may not act simultaneously as a manager and
depositary for the same fund.

                                     -117-

<PAGE>

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

GENERAL

Substantially all of our operations and customers are located in Argentina, and
as a result we have been materially and adversely affected by the current
economic crisis in Argentina. As a result, the Bank currently cannot service its
debt obligations under their current payment terms as its cash flow from
operations is insufficient to cover its operating costs and debt service
obligations under their current terms, and the overall asset quality of the
Bank's loan portfolio has deteriorated significantly. Due to the unavailability
of any financing from any source, in 2002 the Bank ceased originating any new
loans, and in January 2002 it suspended payment on all of its debt obligations.

Our audited consolidated financial statements have been prepared on the
assumption that we will continue as a going concern. Our independent auditors'
report on our audited consolidated financial statements states that certain
factors give rise to substantial doubt regarding our ability to continue as a
going concern. See the "Report of Independent Accounts" beginning on page F-2 in
our audited consolidated financial statements. Our audited consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. See "Item 3. Key Information --Risk
Factors--Risks Related to the Bank--The Bank's inability to pay its debt service
obligations under their current terms could severely impact our ability to
continue as a going concern." We took this approach assuming that the
restructuring of the Argentine financial system as a whole, together with the
specific plans and actions we hope to implement, including the restructuring of
Banco Galicia's foreign debt and most of its debt with the Argentine Central
Bank, may allow us to continue our operations and maintain the liquidity and
solvency required by the Argentine Central Bank.

The following discussion and analysis is intended to help understand and assess
the significant changes and trends in the historical results and operations of
the Group and the factors affecting its resources. You should read this section
in conjunction with the audited consolidated financial statements and their
related notes included in this annual report.

INFLATION

Effective September 1, 1995 pursuant to the provisions of Decree No.316/95, we
discontinued our prior practice of adjusting our financial statements for
inflation. Effective January 1, 2002, however, as a result of the application of
Argentine Central Bank's Communique "A" 3702, Resolution No.415/02 of the CNV
and Resolution No.240/02 of the FACPCE, we resumed the application of the
adjustment for inflation. To this end, we followed the restatement method
established by Technical Pronouncement No.6 of the FACPCE using the WPI. The
adjustments resulting from the changes in the purchasing power of the peso
between January 1, 2002 and December 31, 2002 are stated in the currency value
as of December 2002.

The following table compares the rate of inflation, as measured by the WPI, the
CPI, the CER and the CVS, for the periods indicated.

<TABLE>
<CAPTION>

                                          FOR THE TWELVE-MONTH PERIOD     FOR THE SIX-MONTH PERIOD       FOR THE YEAR
                                              ENDED DECEMBER 31,              ENDED DECEMBER 31,        ENDED JUNE 30,
                                        ------------------------------------------------------------------------------
                                              2002            2001                  2000                     2000
----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>          <C>                           <C>
Inflation(1)

   Wholesale Price Index............         118.44%         (5.3)%                (0.43)%                   4. 51%
   Consumer Price Index.............          40.95%         (1.5)%                (0.35)                    (1.15)
   CER..............................          40.54%              -                    -                         -
   CVS..............................           0.83%              -                    -                         -
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Source:INDEC.

In the first five months of 2003, the WPI decreased by 2.35% and the CPI
increased only 2.19%. During the same peiod, the CER increased by 2.8% and the
CVS by 0.91%

                                     -118-

<PAGE>

DUAL CURRENCY BALANCE SHEET

Until December 31, 2001, Argentina had a dual currency economy, with both pesos
and dollars used for all types of transactions, except that only pesos can be
used for the payment of salaries and taxes. As a result, Grupo Galicia and Banco
Galicia operated in both pesos and dollars, raising deposits and funding and
making loans in both currencies. Grupo Galicia and Banco Galicia generally
matched as closely as possible their peso-denominated assets and liabilities and
their dollar-denominated assets and liabilities, while keeping a net asset
position in foreign currency, that is more assets than liabilities denominated
in foreign currency, in accordance with its risk management policy.

In January 2002, the Government repealed the Convertibility Law and devalued the
currency. The peso has floated since February 2002. See "Item 3. Key
Information--Exchange Rate Information."

The current legislation allows for deposit taking in US dollars, which is
actually limited due to the measures taken in December 2001 and during 2002, and
its effects on the financial system.

As of December 31, 2002, the Bank's position in foreign currency was to a large
extent the result of the measures taken by the Government during 2002, mainly
the compulsory "asymmetric pesification" of certain assets and liabilities and,
in the case of the Bank, the compensation provided by the Government for the
effects of the asymmetric pesification through dollar-denominated bonds.

The following table sets forth the total amount of Grupo Galicia's and Banco
Galicia's peso-denominated and dollar-denominated loans, assets, deposits and
liabilities at the dates indicated.

<TABLE>
<CAPTION>
                                         GRUPO GALICIA, AS OF         BANCO GALICIA, AS OF
                                 -----------------------------------  -------------------
                                            DECEMBER 31,                    JUNE 30,           PERCENTAGE INCREASE FROM
                                 -----------------------------------  --------------------------------------------------------------
                                                                                             DEC.31,2002   DEC.31,2001   DEC.31,2000
                                                                                                  TO            TO            TO
                                   2002         2001         2000         2000               DEC.31,2001   DEC.31,2000   JUN.30,2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>          <C>          <C>          <C>                   <C>           <C>           <C>
Peso-Denominated Loans........  Ps. 9,624.8  Ps.2,722.7   Ps.4,068.0   Ps.4,574.6               253.50        (33.07)       (11.07)
Foreign Currency-Denominated
 Loans........................        965.0    17,210.8     16,119.1     15,799.0               (94.39)         6.77          2.03
Peso-Denominated Assets.......     13,437.0     5,513.0      8,904.8      9,062.9               143.73        (38.09)        (1.74)
Foreign Currency - Denominated
 Assets.......................     10,260.9    22,123.6     27,664.8     26,066.2               (53.62)       (20.03)         6.13
Peso-Denominated Deposits.....      3,094.4     2,522.8      5,715.3      5,838.7                22.66        (55.86)        (2.11)
Foreign Currency-Denominated
 Deposits.....................      2,069.9    10,863.3     13,734.3     13,261.0               (80.95)       (20.90)         3.57
Peso-Denominated Liabilities       12,367.5     6,369.3      7,052.2      6,909.1                94.17         (9.68)         2.07
Foreign Currency-Denominated
 Liabilities..................      9,705.9    18,190.5     26,632.2     25,310.2               (46.64)       (31.70)         5.22
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ARGENTINE ECONOMY IN 2002

In 2002, the economy and the Argentine financial system were impacted by the
unprecedented public sector's financial and political crisis, the financial
system's liquidity crisis, which began in late 2001, and of the government's
initiatives taken to resolve them. See "Item 4--Informaiton on the Company--Main
Regulatory Changes in 2002 and 2003." During the first six months of 2002,
Argentina suspended payments on its sovereign debt, abandoned the peso-dollar
parity regime that had existed for over a decade, and devalued the peso. During
this period, economic activity collapsed with the largest contraction in the
level of economic activity in Argentine history, fiscal revenues fell, inflation
rose significantly and the financial system's liquidity crisis worsened. The
nominal exchange rate and nominal interest rates increased significantly
reflecting the crisis. As a result, the political and social situation worsened
considerably. During the second half of 2002, most real and financial variables
stabilized in the third quarter and, since then, financial indicators began to
improve and the favorable trend in economic activity indicators consolidated
during the fourth quarter, for the first time since the beginning of the
recession in 1998.

                                     -119-

<PAGE>

By the end of 2002, the economy seemed to have bottomed out from the crisis and
the recession that began in 1998. However, the recovery observed was against
extremely depressed levels of economic activity, similar to those of the early
1990s. In addition, the recovery is the result of a set of economic policies
aimed mainly at administering the crisis, that did not include structural
reforms needed to generate sustainable long-term economic growth. These
structural reforms remain pending.

During 2002, the government attempted unsuccessfully to reach an agreement with
the IMF. In the first half of 2002, the government aimed at obtaining additional
funding from the IMF. During the second half of 2002, its focus turned to
prevent a default with the IMF that would have complicated the rollover of
maturing loans from other multilateral lending institutions and obtaining new
loans from these institutions. After the default with private creditors, these
institutions are almost the only source of credit for the government. By
November 2002 the government was in arrears with the World Bank and the
Inter-American Development Bank (the "IDB"). This situation was cured after
Argentina finally reached a short-term agreement with the IMF in mid January
2003. Under the agreement, US$6,000 million in public sector debt with the IMF
maturing in 2003 through the month of August will be rolled over. The agreement
also paved the way for a rollover of US$4,400 million in World Bank and IDB
loans. The agreement did not include new funds and, given its short-term nature,
it mainly contemplates monetary and fiscal targets.

During the 1st quarter of 2003, the growth trend in the Argentine economy
continued to consolidate, which was reflected in most of the leading indicators,
except for those related to domestic demand.

In accordance with the latest data available, GDP accumulates four quarters of
seasonally adjusted q-o-q growth: 0.8% in the 2nd quarter of 2002; 0.6% in the
3rd quarter; 0.8% in the 4th quarter and 2.0% in the first quarter of 2003. GDP
is estimated to grow in the order of 5%-6% in 2003.

THE ARGENTINE FINANCIAL SYSTEM IN 2002 (Figures in this section are stated in
current currency)

FIRST HALF OF 2002

During the first half of 2002, the Argentine financial system was strongly
affected by the significant changes in banking regulations, which are described
in detail in "--Main Regulatory Changes in 2002 and 2003" and the end of the
peso-dollar parity. The "asymmetric pesification" of bank's assets and
liabilities generated significant additional distortions in financial
institutions' balance sheets and affected the public's confidence in the
financial system. As a result, the loss of deposits and liquidity by financial
institutions observed at the end of 2001 continued in 2002. At the beginning of
January 2002, holders of deposits in the financial system began to obtain
judicial injunctions ("amparos") that allowed them to recover their deposits
that had been frozen as part of the government's public emergency measures.

Following the devaluation of the peso, the lack of future markets for the dollar
or of assets that could serve as substitutes to it in the domestic financial
market, caused the bank run to turn automatically into a currency run, resulting
in a fall in the level of international reserves and in increases in the
exchange rate and in prices. Due to the low liquidity of the financial system,
the government decided to restructure most peso-denominated time deposits and
most deposits originally denominated in dollars. Restructured deposits would be
reimbursed in accordance with a schedule that depended on the amount of the
deposit and the original currency of denomination. See "--Main Regulatory
Changes in 2002 and 2003--Deposits."

The rescheduling of deposits created a new source of instability for the
financial system as the reimbursement of deposits pursuant to judicial orders
("amparos") generated a constant outflow of funds. These reimbursements were
made earlier than the new maturity date established in the restructuring
schedule and most of them at market exchange rates, much higher than the Ps.1.4
per US$1 at which deposits had been pesified.

During the first quarter of 2002, the Argentine Central Bank provided assistance
to financial institutions with liquidity problems for approximately Ps.2,500
million. As the outflow of deposits continued, the Argentine Central Bank's
assistance also increased, reaching a maximum in the second quarter of Ps.4,900
million. The Argentine Central Bank absorbed this expansion in the base money by
selling international reserves. In mid-March the

                                     -120-

<PAGE>

Argentine Central Bank issued the Lebac, short-term debt instruments intended to
replace the sale of reserves. The Lebac were also intended to become an
alternative asset to the dollar for investors and to give the economy a
reference interest rate. The absorption of excess money supply through Lebac
placements gained importance throughout 2002.

During the first half of 2002, the negative impact of the recession and of the
regulatory changes over the financial system's level of activity as well as over
its asset quality were most substantial. At the same time, the evolution of the
main variables that determine financial institutions' financial income
experienced significant distortions. These variables were: i) the return on
assets, largely fixed by the government when issuing the rules on pesification
and indexation to the CER (a coefficient is in turn tied to the evolution of the
CPI); ii) the wholesale price inflation rate used to determine the cost of
exposure of a bank's liquid net worth to inflation (usually a loss for a
financial institution); and iii) the exchange rate, which determined banks'
gains or losses on its net positions in foreign currency and the quotation
differences associated to the payment of deposits pursuant to judicial orders.

At the end of the first semester, the nominal exchange rate reached one of the
highest levels of the year, Ps.3.80 per US$1. Borrowing interest rates also
increased significantly as compared to previous periods. At the end of June, the
average nominal interest rate in the financial system for 30-day time deposits
reached 58.71% per annum and the interest rate on Argentine Central Bank notes
(Lebac), a short-term debt instrument created during the first quarter of 2002,
was 80% per annum, for the 14-day maturity.

Since December 2001, there was virtually no lending activity in Argentina. In
addition, during the first half of 2002, private sector loans reduced to Ps.
12,500 million mainly due to loan repayments and prepayments. These repayments
and prepayments were the main source of financial institutions' liquidity to
deal with the outflow of deposits.

In mid February, Congress passed Law No.25,563 that suspended for 180 days
judicial proceedings against delinquent debtors and bankruptcy procedures. These
measures affected banks' ability to seize collateral. In addition, the
government established the pesification and indexation of the financial system's
loans. The rules regulating the indexation of these assets were repeatedly
modified in the following months. In this environment, financial institutions
began the process of restructuring the portfolio of loans to the private sector,
mainly their commercial portfolio, subject to the joint restrictions imposed by
the debtors' ability to cancel their debts and the applicable rules. See "Item
4. Information on the Company--Main Regulatory Changes in 2002 and 2003--Loans
to the Private Sector and "Asymmetric Indexation."

SECOND HALF OF 2002

The situation of the financial system began to improve in the third quarter of
2002. In the Canje I of government bond in exchange for of transaction deposits
(checking and savings accounts) within the "corralito" and restructured
deposits, which ended in mid July, Ps.8,000 million were exchanged, according to
information released by the Ministry of Economy. After the Canje I, from mid
July until September 30th, the amount of transactional deposits in the system
decreased slightly from Ps.26,700 million to Ps.26,200 million. Time deposits of
less than 180 days (essentially new voluntary time deposits) increased more than
Ps.5,150 million in the semester. As a result, total "free" deposits of the
financial system (defined as deposits in current and savings accounts and
voluntary time deposits, not including restructured deposits and those tendered
in the Canje I), increased by approximately Ps.4,650 million. The reason was
that financial institutions were able to retain within the system most of the
funds released as a result of the reimbursement of deposits pursuant to judicial
orders, of the freeing of restructured deposits in accordance with the
reimbursement schedule, and of the reimbursement of restructured deposits of
less than Ps.7,000 or Ps.10,000. These deposits were retained at decreasing
interest rates. See "Item 4. Information on the Company--Main Regulatory Changes
in 2002 and 2003--Deposits."

The gradual recovery of liquidity in the financial system drove down interest
rates, with the nominal average interest rate on 30-day deposits reaching 38.05%
per annum at the end of the quarter and the rate on 14-day Lebac reaching 32%
per annum.

                                     -121-

<PAGE>

As a result of the increasing stability in prices, interest rates and
transactional deposits, effective December 2, 2002, the government decided to
completely eliminate the restrictions on cash withdrawals from transactional
deposit accounts of the "corralito". The release of funds did not affect the
exchange rate.

During the last quarter of the year, total "free" deposits in the financial
system, net of rescheduled deposits and of those tendered in both swaps,
increased by Ps.6,300 million. The increase continued even after the lifting of
the "corralito" and the maturity of the first installment of the schedule to
reimburse peso-denominated time deposits of amounts larger than Ps.30,000.
Transactional deposits remained stable. Therefore, as in the third quarter,
total deposits in the financial system grew as much as the new time deposits of
less than 180 days. Again, financial institutions were able to maintain within
the system, with decreasing interest rates, most of the funds released as a
result of the reimbursement of deposits pursuant to judicial orders, of the
freeing of restructured deposits in accordance with the reimbursement schedule,
and of the lifting of the "corralito".

The average nominal interest rate in the system for 30-day time deposits was
27.88% per annum and the interest rate on 30-day Lebac was 6.9% per annum at the
end of the fourth quarter. During the quarter the Argentine Central Bank stopped
issuing the 14-day Lebac and began placing longer-term ones bearing lower
interest rates. In effect, at the end of 2002, the interest rates on 4- and
6-month Lebac was 18% and 46%, respectively, while it was 42% at the beginning
of November for the 4-month series, and 82% at the end of October for the
6-month series.

Restructured deposits continued decreasing during the second half of 2002, as a
direct consequence of the reimbursements mandated by judicial orders. The effect
of these payments on the cash of the financial system, including the difference
between the Ps.1.4 per US$1 parity at which the restructured deposits were
registered in bank books and the market exchange rate (applicable to those
deposits that had originally been denominated in dollars), is estimated to have
amounted to Ps.10,500 million for the whole 2002. The estimated balance of
restructured deposits in the financial system, without including the adjustment
by the CER coefficient, as of year end was approximately Ps.14,700 million.

The Canje II had not ended at year end. This exchange ended in May 2003 with a
degree of participation from deposit holders in the financial significantly
below that of the Canje I.

The reduction in private sector loans also decreased in the semester, amounting
to Ps.6,900 million. However, repayments and prepayments on these loans was
still an important source of liquidity for financial institutions. Since the
third semester, the reduction in private sector loans has practically
compensated banks' needs for funds associated to the reimbursement of
restructured deposits and the payments mandated by judicial orders.

The liquidity of the financial system (measured as cash held in bank vaults plus
banks' deposits with the Argentine Central Bank, as a percentage of total
deposits) improved in the quarter, reaching 21.8% at the end of the year
compared with 12.3% at the end of June. Consistently, the assistance of the
Argentine Central Bank to financial institutions remained stable in the second
half of the year, reflecting this improvement. International reserves began to
increase in the fourth quarter, to reach US$10,500 million at the end of the
year.

The exchange rate at the end of 2002 was Ps. 3.36 per US$1, which implied a
10.2% appreciation of the peso in the last quarter of the year, and of 11.6% in
the second semester.

RESULTS OF OPERATIONS OF GRUPO GALICIA FOR THE FISCAL YEARS ENDED DECEMBER 31,
2002 AND DECEMBER 31, 2001 AND THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000

GENERAL

The following is a discussion of our results of operations

(i)   for the twelve months ended December 31, 2002 ("FY 2002"), as compared
      with the results of operations for the twelve months ended December 31,
      2001 ("FY 2001"),

                                     -122-

<PAGE>

(ii)  for FY 2001 as compared with the results of operations for the six months
      ended December 31, 2000, which have been annualized to make comparisons
      possible, and

(iii) for the six month period ended December 31, 2000, for which there is no
      comparable six month data for the prior year.

Banco Galicia is the predecessor entity of Grupo Galicia, which became the
successor entity following the July 2000 exchange offer whereby we offered to
exchange shares of Banco Galicia for shares of Grupo Galicia. We were formed on
September 14, 1999, as a financial services holding company, to hold all of the
shares of capital stock of Banco Galicia held by members of the Escasany, Ayerza
and Braun families. As a result of the exchange offer completed in July 2000,
our interest in Banco Galicia amounted to 93.23% and by the end of 2002 our
interest was 93.59% as a result of open market purchases. Therefore, for periods
prior to July 1, 2000, the financial statements of Banco Galicia have been
presented for the two years ended June 30, 2000. From July 1, 2000 onwards the
financial statements of Grupo Galicia have been presented, for the two fiscal
years ended December 31, 2002 and for the six months ended December 31, 2000.
There is no comparable consolidated information for the periods previous to the
exchange.

NET INCOME

Grupo Galicia's net income is substantially the result of its interest in Banco
Galicia, Banco Galicia being its most significant subsidiary.

In FY 2002 our results of operations, before the loss absorption, was a net loss
Ps.2,817.0 million. The possibility for banks to absorb certain losses incurred
in 2002 up to a certain amount and subject to the approval of the meeting of
shareholders was established by Communique "A"3800 of the Argentine Central
Bank. The loss absorption is explained under the section "Loss Absorption"
below.

The net loss recorded in FY 2002 was mainly the result of:

(i)   provisions for loan losses for Ps.1,634.3 million

(ii)  a monetary loss from financial intermediation for Ps. 1,425.3 million;

(iii) administrative expenses net of the monetary gain from operating expenses
      for Ps.918.5 million,

(iv)  a miscellaneous net loss, net of the monetary loss on miscellaneous
      operations, for Ps.587.5 million,

(v)   a Ps.51.5 million loss from equity investments, and

(vi)  a Ps.65.9 million income tax charge.

These effects were partially offset by

(i)   net financial income before the monetary loss from financial
      intermediation for Ps.1,226.6 million

(ii)  net income from services for Ps.372.2 million.

(iii) minority interests for Ps.267.2 million.

(iv)  A Ps.1,358.2 million loss absorption. See "--Loss Absorption" below.

                                     -123-
<PAGE>

After the loss absorption, Grupo Galicia's recorded a Ps.1,458.8 million net
loss in FY 2002 compared to net income of Ps.262.3 in FY 2001.

<TABLE>
<CAPTION>
                                                                 GRUPO GALICIA                         BANCO GALICIA
                                                ---------------------------------------------------   --------------
                                                        FISCAL YEAR              6 MONTH PERIOD        FISCAL YEAR
                                                    ENDED DECEMBER 31,         ENDED DECEMBER 31,     ENDED JUNE 30,
                                                -------------------------   -----------------------   --------------
                                                    2002          2001               2000                  2000
--------------------------------------------------------------------------------------------------------------------

                                                          (in millons of December 31, 2002, constant Pesos)

CONSOLIDATED INCOME STATEMENT                                                         ANNUALIZED
                                                                                      ----------
<S>                                             <C>           <C>           <C>          <C>          <C>
Financial Income.............................   Ps.  5,747.6  Ps. 3,555.8   Ps. 1,791.7  Ps.3,583.4      Ps.3,275.3
Financial Expenses...........................        4,521.0      2,107.7         967.2     1,934.4         1,696.0
Net Financial Income.........................        1,226.6      1,448.1         824.5     1,649.0         1,579.3
Provision for Losses on Loans and Other
 Receivables ................................        1,634.3        999.8         270.0       540.0           545.0
Net Income from Services.....................          372.2        934.5         417.9       835.8           747.7
Monetary Loss from Financial Intermediation..       (1,425.3)           -             -           -               -
Administrative Expenses......................          939.3      1,358.1         659.5     1,319.0         1,327.3
Monetary Gain (Loss) from Operating Expenses.           20.8            -             -           -               -
Minority Interest............................          267.2        (22.0)        (13.8)      (27.6)            0.7
Income from Equity in Other Companies........          (51.5)        34.7          (9.7)      (19.4)          (12.0)
Miscellaneous Income (Loss), Net ............         (425.8)       382.6          21.4        42.8            60.1
Monetary Gain (Loss) from Other Transactions.         (161.7)           -             -           -               -
Income before Taxes..........................       (2,751.1)       420.0         310.8       621.6           503.5
Income Tax...................................          (65.9)      (157.7)       (114.4)     (228.8)         (162.1)
Net Income before the Absorption.............       (2,817.0)       262.3         196.4       392.8           341.4
Absorption subject to the Approval of the
  Annual Shareholders' Meeting...............        1,358.2            -             -           -               -
NET INCOME AFTER THE ABSORPTION..............   Ps. (1,458.8)  Ps.  262.3   Ps.   196.4  Ps.  392.8      Ps.  341.4
Return on Average Assets.....................          (5.90)%       0.90%         0.64%       1.27%           1.12%
Return on Average Shareholders' Equity.......         (60.51)        8.67          7.34       14.68           12.41
-------------------------------------------------------------------------------------------------------------------
</TABLE>

The decrease in Grupo Galicia's net income for FY 2001 can be traced to higher
provisions for loan losses, which increased Ps.459.8 million over the annualized
six month period, reflecting the deterioration in the Bank's asset quality due
to the recessionary economic context, and a lower financial margin (narrower in
52 b.p.) as a consequence of higher funding costs. These effects were partially
compensated by higher miscellaneous results (increasing Ps. 339.8 million), due
to income coming from government securities that overcollateralize repo
transactions. Moreover, higher net fee income, higher income from equity
investments and a lower income tax, also collaborated to raise Grupo Galicia's
net income.

FY 2001 earnings per share was Ps.0.240, compared to the Ps.0.384 corresponding
to the annualized earnings of the six months ended December 31, 2000. Return on
average assets was 0.90% compared to 1.27% in the six months ended December 31,
2000. Return on average equity reached 8.67% compared to 14.68% in the six
months ended December 31, 2000.

In the second half of 2000, annualized net income was Ps.392.8 million. Net
income mainly consisted of an annualized net financial income of Ps.1,649.0
million and an annualized net income from services of Ps.835.8 million. Net
income was partially offset by an annualized provision for losses on loans and
other receivables of Ps.540.0 million, administrative expenses of Ps.1,319.0
million, and an annualized income tax charge of Ps.228.9 million.

                                     -124-
<PAGE>

FINANCIAL INCOME

The components of financial income were:

<TABLE>
<CAPTION>
                                                                             GRUPO GALICIA                        BANCO GALICIA
                                                           ----------------------------------------------------- --------------
                                                                 FISCAL YEAR               SIX MONTHS ENDED        FISCAL YEAR
                                                               ENDED DECEMBER 31,            DECEMBER 31,         ENDED JUNE 30,
                                                           -----------------------------------------------------  --------------
                                                              2002            2001                2000                 2000
--------------------------------------------------------------------------------------------------------------------------------
                                                                   (in millons of December 31, 2002, constant pesos)

                                                                                                     ANNUALIZED
                                                                                                     ----------
<S>                                                        <C>            <C>           <C>          <C>          <C>
- Income on Loans and Other Receivables Resulting from
   Financial Intermediation and Premiums Earned on
     Reverse Repos......................................   Ps. 4,556.3(2) Ps. 3,282.3   Ps. 1,560.3  Ps. 3,120.6   Ps. 2,820.3
- Income from Government and Corporate
Securities, Net.........................................         794.5          156.6         161.7        323.4         301.4
- Other(1)..............................................         396.8          116.9          69.7        139.4         153.6
                                                           -----------------------------------------------------   -------------
TOTAL...................................................   Ps. 5,747.6    Ps. 3,555.8   Ps. 1,791.7  Ps. 3,583.4   Ps. 3,275.3
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      Reflects income from financial leases, net and differences in quotation
         of gold and foreign currency and premiums on forward sales of foreign
         exchange.

(2)      Includes Ps.3,373.4 million of Cer adjustments.

The following table shows our yields on interest-earning assets and cost of
funds:

<TABLE>
<CAPTION>
                                                                                                                   BANCO GALICIA
                                                       GRUPO GALICIA, AS OF DECEMBER 31,                           AS OF JUNE 30,
                                     -------------------------------------------------------------------------  --------------------
                                                          2002                    2001                2000 (*)                2000
                                     -------------------------------------------------------------------------  --------------------
                                       AVERAGE   NOMINAL  REAL      AVERAGE                AVERAGE                AVERAGE
                                       BALANCE    RATE    RATE      BALANCE       RATE     BALANCE     RATE       BALANCE     RATE
------------------------------------------------------------------------------------------------------------------------------------
                                                       (in millons of December 31, 2002, constant pesos, except rates)
<S>                                  <C>         <C>     <C>      <C>             <C>     <C>          <C>      <C>           <C>
INTEREST-EARNING ASSETS ............ Ps.26,720.5  19.71%   3.43%  Ps.27,018.7     13.98%  Ps.28,056.5  12.58%   Ps.26,008.1   12.43%
  Government  Securities............     2,236.1  13.24   36.49       2,509.4     10.96       2,971.3   9.14        3,142.8   10.41
  Loans.............................    15,130.5  28.86  (26.18)     19,829.4     16.03      19,506.4  14.63       18,094.8   14.46
  Other.............................     9,353.9   6.47   43.42       4,679.9      6.90       5,578.8   7.24        4,770.5    6.07
INTEREST-BEARING LIABILITIES .......    22,698.4  18.89    7.84%     23,839.5      8.42      24,909.1   7.44       22,955.9    7.08
  Current Accounts..................       192.9   9.02  (31.57)        733.5      7.15             -      -              -       -
  Saving Accounts...................     1,439.3   0.62  (20.11)      2,400.7      1.58       2,774.9   1.86        2,875.1    1.92
  Time Deposits.....................     6,316.4  20.95   16.06      14,127.1      9.74      14,919.2   7.72       13,450.2    7.44
  Argentine Central Bank............     7,085.9  31.31  (39.83)        148.3      9.28           6.3      -            8.3    2.63
  Other Financial Entities..........     2,754.7   8.85   58.68       1,693.8      8.61       1,780.9   8.98        1,680.0    8.75
  Debt Securities (includes
    Negotiable Obligations).........     2,546.3   5.90   62.26       2,908.8      8.37       3,167.6   9.23        2,781.0    8.80
  Other.............................     2,362.9  13.83   31.19       1,827.3      7.54       2,260.2   8.72        2,161.3    8.24
SPREAD AND NET YIELD
-Interest Spread, Nominal Basis(1)..               0.82   (4.41)                   5.56                 5.14                   5.35
- Net Yield on Interest-Earning
   Assets (2).......................               3.66   (6.41)                   6.54                 5.98                   6.18
- Financial Margin (3) .............               4.34                            5.36                 5.88                   6.07
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Grupo Galicia consolidated, 6-month period ended December 31, 2000.

(1) Reflects the difference between the average nominal interest rate on
    interest-earning assets and the average nominal interest rate on
    interest-bearing liabilities.

(2) Net interest earned divided by average interest-earning assets.

(3) Represents net financial income, divided by average interest-earning assets.
    According to Communiques "A" 3703 and "3800", the financial margin for FY
    2002 was (0.74)%

FY 2002 compared to FY 2001

For FY 2002 financial income amounted to Ps.5,747.6 million, a 61.6% increase
from the Ps.3,555.8 million recorded in FY 2001.

In accordance with the provisions of Communique "A" 3703 issued by the Argentine
Central Bank, the Group's financial income does not include the gain obtained by
the revaluation of the Bank's net asset foreign currency

                                     -125-
<PAGE>

position as of December 31, 2001, from Ps.1 per US dollar to Ps. 1.4 per US
dollar, as a result of the change in the foreign exchange regime introduced on
January 6, 2002, which implied a 40% increase in the exchange rate. In
accordance with said Communique, this gain had to be directly reflected on a
specific shareholders' equity's account ("Unrealized Valuation Difference from
the Net Asset Foreign Currency Position"), without being recognized in the
income statement. This criterion, which differs from the Argentine professional
accounting standards, modified the fiscal year financial income, since a
Ps.1,451.3 million gain was not recorded in the Bank's income statement.

According to the data shown in the table above this gain was the result of an
increase in the average yield on interest-earning assets, partially offset by a
decrease in the average volume of those assets. The average rate on
interest-earning assets rose 573 basis points to 19.71%. This fluctuation was
based on a 1,283 basis-point increase in the average lending rate, which was
mainly due to the adjustment by the CER of the principal of the pesified loan
portfolio, mainly public-sector secured loans. The CER variation was 40.54%.
Average interest-earning assets amounted to Ps.26,720.5 million, which
represented a 1.1% decrease from the Ps.27,018.7 million in FY 2001. This was
mainly the result of a lower average loan portfolio, which decreased by 23.7%.
The decrease of the average loan portfolio was partially offset by the 99.9%
growth recorded in the item Others.

The average loan portfolio for fiscal year 2002 amounted to Ps.15,130.5 million,
23.7% lower than the Ps.19.829.4 million in FY 2001. This decrease was the
result of a Ps.6,735.1 million decrease in the private-sector loan portfolio,
partially compensated by a Ps.2,036.2 million increase in the public-sector loan
portfolio (mainly secured loans). The increase in the public-sector loan
portfolio was the result of the pesification of this portfolio at the Ps.1.4 per
US dollar exchange rate and of the adjustment of this portfolio's principal by
the CER. The decrease in the private-sector loan portfolio was the result of (i)
the pesification of such portfolio at the Ps.1 per US dollar exchange rate, (ii)
significant payments and prepayments by customers and (iii) securitization
(and/or sale) of private-sector loans when the Plan was launched. See "Item 4.
Information on the Company--Initiatives and Investments--Galicia Capitalization
and Liquidity Plan and--Description of Consolidated Assets." In addition these
variations reflect the restatement of FY 2002 and the FY 2001 comparison base in
constant currency of December 2002.

Based on data prepared daily by the Argentine Central Bank, Banco Galicia's
market share of all loans in the Argentine financial system, excluding the loans
of the four regional credit-card companies, was estimated at 11.04% as of
December 31, 2002, compared with 10.00% as of December 31, 2001.

The average interest rate for total loans was 28.86% for FY 2002, which includes
the CER adjustment. In this period, the loan portfolio to the private sector
accrued a 20.82% interest rate, while loans to the public sector recorded an
average interest rate of 35.57%. Secured loans representing an exposure to the
Argentine government accrue the CER adjustment plus an annual average interest
rate of 4%. Those secured loans that were the result of the provincial-sector
debt swap accrue the CER plus an annual 2% interest rate. The average rate is
lower than the CER variation during the year mainly due to the restatement of
the FY 2002 balance for inflation. Pursuant to the regulatory changes described
in other sections of this annual report, those pesified loans (excluding those
mortgage loans for the sole and permanent residence of the borrower of up to
US$250,000 and certain personal loans and pledge loans) accrue the CER plus an
additional fixed interest rate ranging from 3.5% to 8% depending on the type of
loan, as established by the Argentine Central Bank. Due to the successive
changes in the regulations and since these modifications had not been fully
defined and regulated as of December 31, 2002, mortgage loans for the sole and
permanent residence of the borrower of up to US$250,000 and certain personal
loans and pledge loans, for which the CVS adjustment plus an interest rate
determined by the Argentine Central Bank was established, accrued at such date
the originally agreed interest rate. Private sector loans that were originally
denominated in pesos, mainly credit-card loans beared market interest rates.

The 99.9% increase in the item "Others" of the table above mainly shows the
incorporation of the compensatory and the hedge bonds, still to be received,
resulting from the compensation for the "asymmetric pesification" of assets and
liabilities determined by the government. These Bonds were recorded under "Other
Receivables from Financial Brokerage", for Ps.7,037.2 million as of December 31,
2002. Both Bonds are dollar-denominated and accrue LIBOR and their valuation
followed the increase in the value of the US dollar vis-a-vis the peso during FY
2002. See " -- Description of Consolidated Assets."

The average balance of the Group's net position in government securities was
Ps.2,236.1 million, 10.9% lower than in FY 2001. The average yield on the net
position in government securities was 228 basis points higher than that

                                     -126-
<PAGE>

recorded in the prior fiscal year. The decrease in the average balance was
mainly due to the restatement of the FY 2001 comparison base for inflation. In
addition the decrease was the result of the net effect of the following: (i) a
decrease in the government's securities net position due to the Bank's
participation in the swap of government securities for secured loans in late
2001; (ii) an increase in the peso value of the net position in government
securities not tendered in such swap, given that they were mainly
dollar-denominated securities or they were pesified at the Ps.1.4 per US dollar
exchange-rate. The average net position in government securities during fiscal
year 2002 consisted mainly of Argentine Republic External Notes, Argentine
government bonds at 9% maturing in 2002 ("Bono Encaje"), Fiscal Credit
Certificates and of that portion of the compensatory bond that was actually
credited to the Bank. The Argentine Republic External Notes and the compensatory
bond are dollar-denominated. The "Bono Encaje" and the Fiscal Credit
Certificates were pesified at the Ps.1.4 per US dollar exchange-rate and its
principal was adjusted by the CER. In addition, during September 2002, the Bank
used its holdings of the "Bono Encaje" amounting to Ps.535 million, to acquire
the bonds to be delivered to depositors who had chosen to exchange their
deposits for bonds as part of the Canje I. See "Item 4. Information on the
Company--Main Regulatory Changes in 2002 and 2003--Deposits" and "Item 4.
Information on the Company--Selected Statistical Information--Government and
Corporate Securities."

The average yield on the net position in government securities was the result of
the different interest rates accrued by such government securities. The
Argentine Republic External Notes, Series 74 and 75, accrued the average rate
resulting from the survey conducted by the Argentine Central Bank on the rates
paid by banks for time deposits plus an annual 4.95%, and the "Badlar Rate" (the
average rate resulting from the survey conducted by the Argentine Central Bank
on the rates paid by banks for time deposits of more than Ps.1 million) plus an
annual 2.98%, respectively. The Bono Encaje and the Fiscal Credit Certificate
are adjusted by the CER index and accrue an annual interest rate of 2%. The
compensatory bond has accrued LIBOR.

Financial income also recognizes a gain of Ps.324.7 million, due to foreign
exchange differences and foreign currency premiums (this gain does not include
the gain from the revaluation of the Bank's net asset foreign currency position
as of December 31, 2001, from the Ps.1 per US. dollar parity to the Ps.1.4 per
US. Dollar parity) and income from FX brokerage amounting to Ps.52.5 million.

FY 2001 compared to annualized 2000

FY 2001 financial income amounted to Ps.3,555.8 million while for the second
half of 2000, annualized financial income was Ps.3,583.4 million. If the
interest income from government securities that overcollateralize repo
transactions was recorded under financial income (as it is shown in the "Average
Balances, Field and Rates" table), interest income would amount to Ps.3,842.6
million. Average interest-earning assets reached Ps.27,018.7 million in FY2001,
3.7% lower than the Ps.28,056.5 million corresponding to the six months ended
December 31, 2000. This decrease is mainly explained by the reduction in the
average portfolio of "Other interest earning assets" mainly due to the
reductions in the minimum liquidity requirements established by the Argentine
Central Bank. This decrease was also due to a lower balance of government
securities, as a consequence of the public-sector debt swaps that took place
during 2001. Average yield on interest-earning assets, was 13.98%, increasing
140 b.p. from 12.58% of the six months ended December 31, 2000. This jump is
explained by an increase of 181 b.p. in the average yield on government
securities and a 140 b.p. increase in the average yield on loans, partially
offset by a 34 b.p. decrease in the average yield on "other interest-earning
assets".

Annualized financial income for the second half of 2000 was Ps.3,583.4 million,
with average interest-earning assets of Ps.28,056.5 million and an average yield
of 12.58% on these assets. This compares with average interest-earning assets of
Ps.26,008.1 million and an average yield of 12.43% for the year ended June 30,
2000. A higher volume of dollar-denominated interest-earning assets was
accompanied by an increase in yields, both for peso- and dollar-denominated
interest-earning assets. The increase in the yield on assets was mainly due to
the increase in the lending rates in both currencies, reflecting the trend in
the financial system as a whole.

The average balance of Grupo Galicia's net position in government securities in
FY 2001 was Ps.2,509.4 million, or a 15.5% decrease compared to the Ps.2,971.3
million posted in the second half of 2000. The average yield on such securities
was 181 b.p. higher than the one registered in the six months ended December 31,
2000. Average yield on government securities was 10.96% for FY2001 and 9.15% for
the second half of 2000. It is important to mention that the Bank participated
in the public-debt swap that took place in June 2001(known as "Megacanje"). By
that time,

                                     -127-
<PAGE>

Ps.3,593.4 million of notional amount of the Bank's public-debt instruments
portfolio were replaced by Global 2008 Bonds and Variable Rate Promissory Notes
("Pagares Bono a Tasa Variable or BTVA") maturing in 2006. Subsequently, on
November 6, 2001, the government launched another debt swap through Decree
No.1387/01. In this case, Banco Galicia swapped its eligible government
securities portfolio and its public-sector loan portfolio (including BTVAs) for
secured loans.

The average balance of Grupo Galicia's net position in government securities was
Ps.2,971.3 million, with an average yield of 9.15%. This compares to an average
balance of Ps.3,142.8 million and an average yield of 10.41% for the year ended
June 30, 2000. The fall in the yield on government securities was a result of
lower profits from the trading securities portfolio in the six months ended
December 31, 2000. As of December 31, 2000, the net position in government and
corporate securities included Ps.2,093.1 million recorded in investment accounts
in accordance with the valuation rules set by the Argentine Central Bank. Had
this option not been used, annualized financial income for the second half of
2000 would have declined Ps.7.4 million.

In FY 2001, the average loan portfolio was Ps.19,829.4 million, or 1.7% higher
than the Ps.19,506.4 million posted in the second half of 2000. The average
peso-denominated loan portfolio was Ps. 4,093.0, or 9.9% lower than the Ps.
4,544.2 million registered in the second half of 2000. Average
dollar-denominated portfolio was Ps.15,736.4 million, or 5.2% higher than the
Ps.14,962.2 accounted in the last six months of 2000. Comparing the FY2001
average loan balance with the one registered in the second half of 2000, loans
to the financial sector increased 27.6% and loans to the non-financial
public-sector increased 14.8%, mainly as a result of the extension of new loans
to the Argentine government and to the Fiduciary Fund for Provincial
Development, and as a consequence of the swap launched in November 2001 of
public-sector debt instruments for secured loans. Due to the recession and the
crowding-out effect of the increase in lending to the public sector, loans to
large corporations decreased 23.8%, loans small- and middle-market companies
decreased by 8.3% and loans to medium and large companies decreased 6%. Loans to
individuals increased 9.6%, mainly due to the increase of mortgage lending to
individuals, especially in the first half of the year, as a result of the Bank's
policy of favoring this lower-risk type of loans. In December 2001, Banco
Galicia securitized part of its mortgage loan portfolio. Originally, the
securitized portfolio amounted to US$238.6 million (Galtrust II, III, IV and V
Financial Trusts). The financial trusts launched Class A debt securities for
US$131 million, Class B debt securities for US$45 million and subordinated notes
for US$62.6 million.

The average loan portfolio to individuals for FY 2001 included Ps.924.2 million
due to the consolidation of the four regional credit card companies controlled
by the Bank (Tarjeta Naranja S.A., Tarjeta Comfiar S.A., Tarjetas del Mar S.A.
and Tarjetas Cuyanas S.A.).

The average loan portfolio for the second half of 2000 was Ps.19,506.4 million.
The average peso-denominated loan portfolio was Ps.4,544.2 million, while the
average dollar-denominated loan portfolio was Ps.14,962.2 million. This compares
to an average balance for the peso-denominated portfolio of Ps.4,481.5 million
and an average balance for the dollar denominated portfolio of Ps.13,613.3
million for the year ended June 30, 2000. The increase in the average balances
of the peso loan portfolio for the year ended June 30, 2000 was due to increases
in lending to the private sector. The increase in dollar-denominated loans was
driven by an increase in lending to the Argentine public sector, partly offset
by the securitization of Ps.1,072.6 million of loans to provincial governments,
as well as an increase in lending to the private sector, mainly mortgage
lending.

The average interest rate on loans was 16.03% in FY 2001, or 140 b.p. higher
than the 14.63% accounted in the second half of 2000. The average interest rate
for peso-denominated loans was 25.06% while for dollar-denominated loans was
13.68%. In the second half of 2000, the average interest rate on
peso-denominated loans and dollar-denominated loans were 21.30% and 12.61%,
respectively. These increases in rates, which were more notable in the case of
loans to the public sector, reflect the increasing scarcity of funds in 2001and
the increase in risk due to the unfolding economic crisis.

The average interest rate for all loans in the second half of 2000 was 14.63%.
The average interest rate for peso-denominated loans was 21.30%, while the
average interest rate for dollar-denominated loans was 12.61%. This compares to
an average rate for all loans of 14.46% for the year ended June 30, 2000. The
average interest rate was 21.86% for peso-denominated loans and 12.02% for
dollar-denominated loans for the year ended June 30, 2000. According to data on
the Argentine financial system prepared by the Argentine Central Bank, Banco
Galicia's loan market share was 10.00% as of December 31, 2001 and 9.58% as of
December 31, 2000. These figures did not include

                                     -128-
<PAGE>

Tarjetas Regionales S.A.'s subsidiaries loans. Peso-denominated loan market
share rose from 5.98% to 6.16% while dollar-denominated loan market share
declined to 11.02% from 11.24%.

In FY 2001, the category "Other" in the table above amounted to Ps.4,679.9
million on average. This represented a 16.1% decrease compared to the Ps.5,578.8
million posted in the second half of 2000. This reduction was mainly explained
by the fact that, following a change in Argentine Central Bank rules, minimum
liquidity requirements were complied with through reverse repo transactions
until May 2001, while since June 2001, they were comprised of deposits in banks
current accounts at the Argentine Central Bank.

The balance of the FY 2001 category "Other" in the table above includes Ps.431.4
million representing the average balance of the financial trust Galtrust I for
the six-month period ended December 31, 2000. This trust was created in October
2000 in connection with the securitization of provincial loans for a total
amount of Ps.1,072.6 million. The securitized loans pertained to the Bank's
portfolio of loans to provincial governments, guaranteed by federal tax revenues
shared with the provincial governments. This trust was recorded in the "Other
Receivables from Financial Brokerage" account in our financial statements and
its balance as of December 31, 2000, was Ps.978.6 million and Ps.646.6 million
as of December 31, 2001. The provincial loans that constituted the underlying
assets in this trust were tendered in the November 2001 swap. The swap of this
provincial debt into secured loans is pending completion.

FINANCIAL EXPENSES

THE COMPONENTS OF FINANCIAL EXPENSES WERE:

<TABLE>
<CAPTION>
                                                                     GRUPO GALICIA                     BANCO GALICIA
                                                    -----------------------------------------------    -------------
                                                         FISCAL YEAR               SIX MONTHS            FY ENDED
                                                      ENDED DECEMBER 31,        ENDED DECEMBER 31,        JUNE 30,
                                                    -----------------------------------------------    -------------
                                                       2002        2001               2000                  2000
--------------------------------------------------------------------------------------------------------------------
                                                            (In millions of December 31,2002, constant pesos)

                                                                                         ANNUALIZED
                                                                                         ----------
<S>                                                 <C>         <C>           <C>       <C>             <C>
Expenses from
  Interest on Deposits............................  Ps.   444.5 Ps. 1,482.6   Ps. 597.7 Ps. 1,195.4     Ps. 1,045.9
  Debt Securities ................................        278.5       232.9       146.1       292.2           228.3
  Contributions and Taxes.........................         50.0        92.2        39.1        78.2            90.7
  Other (1).......................................      3,748.0       300.0       184.3       368.6           331.1
                                                     ----------------------------------------------     ------------
TOTAL.............................................  Ps. 4,521.0 Ps. 2,107.7   Ps. 967.2 Ps. 1,934.4     Ps. 1,696.0
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes accrued interest on liabilities resulting from financial brokerage
    with banks and international entities, and premiums payable on repos. For FY
    2002 includes $1,365.2 million of interest on the financial assistance from
    the Argentine Central Bank and $1,700.7 million of CER adjustments.

FY 2002 compared to FY 2001

Financial expenses for fiscal year 2002 were Ps.4,521 million, 114.5% higher
than in FY 2001. This increase reflected a 1,047 basis points growth in the
average interest rate of interest-bearing liabilities, partially offset by a
4.8% decrease in their volume.

Average interest-bearing liabilities amounted to Ps.22,698.4 million, in
comparison with Ps.23,839.5 million for FY 2001. This decline is to a large
extent the result of the restatement of the comparison base in constant currency
of December 2002. In addition the decline was the result of the decrease in
deposits during the first half of 2002, partially compensated by (i) the
pesification of deposits originally constituted in Argentina, or the CEDROs, and
denominated in US dollars at the exchange rate of Ps. 1.4 per US dollar and the
adjustment of their principal by the CER, (ii) the valuation of
dollar-denominated liabilities subject to foreign law at the market exchange
rate, which increased from Ps.1 per US dollar to Ps.3.363 per US dollar at the
close of FY 2002, including debt with foreign financial institutions, debt
securities and deposits in foreign branches and subsidiaries; (iii) the increase
in Argentine Central Bank's financial assistance for liquidity purposes due to
the fall in the Bank's deposits in the first half of 2002; (iv) the recording of
the Argentine Central Bank advance to be used for the subscription of the hedge
bond; and (v) the incorporation of the loans granted to the Bank by Sedesa and
the Fiduciary Fund for the Assistance to Financial Institutions and Insurance
Companies when the Plan was launched, which are dollar-denominated.

                                     -129-
<PAGE>

Total interest-bearing deposits amounted to Ps.7,948.6 million, 54% lower than
in FY 2001. This decrease was the result of the decrease in dollar-denominated
deposits of subsidiaries, mainly during the third quarter of the 2002, and of
CEDROs. The decline in the latter resulted from (i) legal actions by deposit
holders demanding their reimbursement and (ii) the offering by the government to
holders of restructured deposits to exchange them for Argentine government
bonds. These decreases were compensated by the pesification of deposits in
Argentina originally denominated in US dollars at the exchange rate of Ps. 1.4
per US dollar and by adjustment of their principal by the CER, and by the
valuation of deposits in foreign branches and subsidiaries, mainly deposits in
Galicia Uruguay, at the market exchange rate. It should be reminded that Galicia
Uruguay's restructuring into new deposits or negotiable obligations was approved
by the Uruguayan Courts in late December 2002. As a result, FY 2002 average
dollar-denominated interest-bearing deposits mainly reflect all of Galicia
Uruguay deposits. See "Item 4. Information on the Company--Selected Statistical
Information--Average Balance Sheet and Income from Interest-Earning Assets and
Expenses from Interest Bearing Liabilities."

Average peso-denominated time deposits amounted to Ps.2,892.1 million in FY
2002. This amount mainly represents CEDROs, which in turn mainly represent
deposits originally constituted in US dollars, that were converted into pesos at
the Ps.1.40 per US dollar parity. As of December 31, 2002, total CEDROs amounted
to Ps.729 million (principal only) and Ps.73 million corresponded to
restructured deposits whereby their holders had exercised the option to exchange
them for Argentine government securities, pursuant to Decree No.1,836/02 (Canje
II). The Canje I was completed in December 2002, which in the Bank's case, lead
to a decrease in restructured deposits of Ps.693 million (principal only) in the
last month of the year.

Furthermore, restructured deposits decreased during 2002 as a result of a
significant number of complaints that have been filed against financial
institutions by deposit holders.

Banco Galicia's market share of total deposits in the Argentine financial
system, considering deposits in Argentina only and including those exchanged for
government securities in the Canje I, reached 5.26% as of December 31, 2002,
while as of December 31, 2001, the Bank's market share amounted to 7.3%. Banco
Galicia's market share in the Argentine free deposit system (deposits in current
and savings accounts and voluntary time deposits) was 4.36% as of the end of FY
2002.

The average balance of debt securities was Ps. 2,546.3 million, an 12.5%
decrease from FY 2001. This decrease is the result of the restatement for
inflation of FY 2001 figures, the reclassification of debt corresponding to two
commercial papers for a total amount of US$332 million into credit lines with
foreign banks, currently under restructuring (recognized in the item "Others" in
the table showing the yields on average interest-earning assets and the cost of
funds) and the restructuring of two notes of the New York Branch for an
aggregate amount of US$200 million, since the new securities were issued for a
lower amount (US$115 million) as a consequence of payments made in cash and of
the forgiveness of debt See "Item 4. Information on the Company--Initiatives and
Investments--Galicia Capitalization and Liquidity Plan." These effects were
partially compensated by the fact that these liabilities are dollar-denominated
and valued at the market exchange rate..

Debt with financial institutions amounted to Ps.2,754.7 million in FY 2002. This
amount mainly corresponds to the the Bank's dollar-denominated debt with foreign
financial institutions. See "Item 4. Information on the Company--Selected
Statistical Information--Average Balance Sheet and Income from Interest-Earning
Assets and Expenses from Interest Bearing Liabilities." When compared with the
average balance for FY 2001, total debt with financial institutions shows a
62.6% increase. This increase resulted from the increase in the market exchange
rate during 2002 and the reclassification mentioned above.

The average balance of financial assistance from the Argentine Central Bank in
FY 2002 amounted to Ps.7,085.9 million, as compared with Ps.148.3 million in FY
2001. This increase was due to the fact that the Argentine Central Bank provided
financial assistance to the Bank until April 2002 to face the run on deposits
faced by the financial system and the Bank. The average balance of financial
assistance for liquidity reasons was Ps.4,836.3 million, of which Ps.480.1
million corresponded to a loan from the Argentine Central Bank received to pay
off debt with the Bank Liquidity Fund. See "Item 4. Information on the
Company--Initiatives and Investments--Galicia Capitalization and Liquidity
Plan." In addition, the increase is explained by the incorporation of an average
balance of Ps.1831.8 million corresponding to the loan to be granted by the
Central Bank to be used for the subscription of the hedge bond.

                                     -130-
<PAGE>

The loans from Sedesa and the FFAEFyS, which are dollar-denominated liabilities,
for average balances of Ps.158.6 million and Ps.79 million, respectively, in FY
2002, resulting from the implementation of the Plan, are shown under the item
"Others." The average balance of other interest-bearing liabilities was
Ps.2,362.9 million in FY 2002, 29.3% higher than in FY 2001. The increases is
primarily due to the fact that these liabilities are mainly dollar denominated.

In FY 2002 the 1,047 b.p increase in cost of funds was mainly the result of the
increase in the cost of interest-bearing deposits and in the cost of the
financial assistance from the Argentine Central Bank.

Restructured deposits representing deposits originally constituted in dollars
accrued interest at CER plus a 2% interest rate during FY 2002. CEDROs
originally denominated in pesos accrued at an interest rate of 7%.

The cost of the financial assistance from the Argentine Central Bank is mainly
explained by the cost of the loans for liquidity support, excluding the advance
received to pay off debts with the Bank Liquidity Fund (Fondo de Liquidez
Bancaria), which accrued an average interest rate of 28.25% during FY 2002. The
advance received to pay off such debt accrued the principal adjustment by the
CER plus an annual 3% interest rate. The loan to be received to purchase the
hedge bond accrued the principal adjustment by the CER plus an annual interest
rate of 2%.

These increases in the cost of funds mentioned in the paragraph above were
mitigated by the decrease in the cost of debt securities, reflecting the
decrease in the LIBOR rate and of the debt reduction obtained in the
restructuring of the New York Branch's debt securities. In addition, the cost of
dollar-denominated time deposits decreased from 8.92% in FY 2001 to 3.49% in FY
2002. This reduction mainly reflects the fact that Galicia Uruguay time deposits
accrued a 2% interest rate during 2002.

The loan from Sedesa accrued an interest rate equal to the 180-day LIBOR plus an
annual 3%. The loan from the FFAEFyS accrued an interest rate equivalent to the
180-day LIBOR plus an annual 4%, with a minimum rate of 8.07% per annum.

FY 2001 compared to annualized 2000

In FY 2001, financial expenses were Ps.2,107.7 million compared to the
annualized Ps.1,934.5 million posted in the second half of 2000. The average
balance of the interest-bearing liabilities was Ps.23,839.5 million in FY 2001,
4.3% lower than the Ps.24,909.1 million registered in the last six months of
2000. The average yield on interest-bearing liabilities was 8.42%, or 98 b.p.
higher than the average yield in the second half of 2000.

The annualized financial expenses for the second half of 2000 were Ps.1,934.5
million, primarily due to an average volume of interest-bearing liabilities of
Ps.24,909.1 million, with an average cost of 7.44%. In the same period, average
interest-bearing deposits increased to Ps.17,694.0 million, and their average
cost was 6.80%.

In FY 2001 average peso-denominated interest-bearing deposits amounted to
Ps.3,465.4 million, 21.0% lower than the Ps.4,385.3 million posted in the second
half of 2000. Average dollar-denominated interest-bearing deposits totaled
Ps.13,795.9 million, 3.7% higher than the Ps.13,308.8 million accounted in the
second half of 2000. The increase in dollar-denominated average deposits and the
decrease in peso-denominated average deposits were due to depositors' preference
for dollar-denominated deposits, a historic behavior of Argentine depositors in
periods of economic crisis and uncertainty, such as 2001.

Average total interest-bearing deposits fell during FY 2001 to Ps.17,261.3
million from Ps.17,694.1 million during the second half of 2000, a 2.4%
decrease. These average figures do not reflect the significant loss of deposits
suffered by the Bank in 2001, given that this loss was concentrated in the last
two months of the year.

Average peso-denominated interest-bearing deposits were Ps. 4,385.3 million in
the second half of 2000, while average dollar-denominated interest-bearing
deposits totaled Ps. 13,308.8 million for the same period. This compares with an
average balance for peso-denominated interest-bearing deposits of Ps. 4,377.6
million and an average balance of dollar-denominated interest-bearing deposits
of Ps. 11,947.7 million for the year ended June 30, 2000. This increase in
dollar-denominated interest-bearing deposits was a reflection of two factors:
firstly, the increase in the willingness of customers to save rather than
consume during the recession. The fact that most of the increase arose from the
dollar-

                                     -131-
<PAGE>

denominated deposits was a reflection of customers' willingness to hold dollars
rather than pesos due to the uncertain economic environment in Argentina, and
secondly, the increase in Galicia's market share of deposits within the
financial system.

Banco Galicia's deposit market share reached 7.30% as of December 31, 2001,
lower than the 10.09% recorded in the previous year. In the same period, the
Bank's peso-denominated deposit market share decreased from 8.07% to 6.38% while
its share of dollar-denominated deposits dropped from 11.30% to 7.65%.

Banco Galicia's share of total deposits reached 10.09% as of December 31, 2000,
which was higher than the 9.62% recorded as of June 30, 2000. In the same
period, its share of peso-denominated deposits increased from 7.68% to 8.09%,
and its share of dollar-denominated deposits rose from 10.91% to 11.29%.

The average cost for peso-denominated deposits was 10.15% in FY2001 compared to
the 7.16% posted in the second half of 2000. In the same period, the average
cost for dollar-denominated deposits rose to 8.08% from 6.68%. During 2001, the
Argentine Central Bank ruled on interest-bearing current accounts. The average
cost for this type of peso-denominated current accounts was 8.41%, while for the
dollar-denominated current accounts the average cost was 6.66%. The average rate
for peso-denominated savings accounts was 1.69% in FY 2001 compared to the 1.86%
accrued in the second half of 2000. The average cost for dollar-denominated
savings accounts was 1.51% and 1.85%, respectively. Average rate for
peso-denominated and dollar-denominated time deposits were 14.03% and 8.92%,
respectively, an increase of 449 b.p. and 166 b.p. when compared to the 9.54%
and 7.26%, respectively, accounted in the second half of 2000. In general, the
reduction in bank deposit bases and the increasing uncertainty led all interest
rates to increase significantly during 2001, with the exception of interest
rates on savings accounts. This was due to the fact that customers' funds
(mainly corporate customers' funds) previously invested in savings accounts
migrated to remunerated current accounts with higher interest rates.

The average cost for peso-denominated deposits was 7.16% for the second half of
fiscal year 2000, while the cost for dollar-denominated deposits was 6.68% for
the same period. This compares to an average cost for peso-denominated deposits
of 7.3 % and an average cost for dollar-denominated deposits of 6.16% for the
year ended June 30, 2000. The increase in the average dollar-denominated rate
was due to the increase in the amount of time deposits relative to the amount of
savings-account deposits from June 30, 2000 to December 31, 2000. Since time
deposits pay a higher average interest rate, an increase in the proportion of
time deposits increases the average rate paid on all deposits. Additionally
interest rates paid on dollar-denominated deposits increased. The average cost
for peso-denominated savings-account deposits for the second half of fiscal year
2000 was 1.86%, compared to an average rate for the year ended June 30, 2000 of
2.04%, while the average cost for dollar-denominated savings-account deposits
was 1.85%, compared to an average rate of 1.81% for the year ended June 30,
2000. The average cost for peso-denominated time deposits was 9.54%, compared to
a 7.26% cost for dollar-denominated time deposits for the same period. For the
year ended June 30, 2000 the average cost of peso-denominated time deposits was
9.77% and the average cost of dollar-denominated deposits was 6.77%.

The average balance of debt instruments amounted to Ps. 2,908.8 million, a 8.2%
decrease compared to the Ps. 3,167.6 million posted in the second half of 2000.
The decrease in the average balance was due to the fact that during FY 2001 the
Bank paid off debt (in face value terms) in the amount of Ps.1,840.6 million and
new issues amounted to Ps.991.7 million. The average cost rate narrowed 86 b.p.
from 9.23% to 8.37%, mainly due to the decrease in international interest rates.

The average balance of debt instruments (mainly consisting of debt placements in
the international market) in the second half of 2000 amounted to Ps.3,167.6
million, with an average cost of 9.23%. This compares to an average balance of
debt instruments of Ps.2,781.0 million with an average cost of 8.8% during the
year ended June 30, 2000. The increase in the average amount results from the
fact that, in the second half of 2000, the Bank paid off debt in the amount of
Ps.825.7 million and issued new debt for Ps.1,194.9 million. The increase in the
interest rates was due to the increase in international interest rates.

The average use of credit lines from foreign banks was Ps.1,693.8 million in FY
2001, or 4.9% decrease compared to the Ps.1,780.9 million used in the last six
months of 2000. The average cost rate dropped from 8.98% to 8.61% in the same
period.

                                     -132-
<PAGE>

During the six-month period ended December 31, 2000, the average use of credit
lines from foreign banks was Ps.1,780.9 million, at an average cost of 8.98%.
This compares to an average use of Ps.1,680.0 million and an average cost of
8.75% for the year ended June 30, 2000. The volume growth is indicative of the
need for the Bank to finance increases in business. The rate of growth is
indicative of the increase in international interest rates to Argentine
borrowers.

NET FINANCIAL INCOME

FY 2002 compared to FY 2001

The economic policy implemented by the government in 2002 meant the compulsory
modification by the government of the currency of denomination of bank assets
and liabilities as of December 31, 2001, as well as of their interest rates and
maturity, and introduced the capital adjustment by the CER of the pesified
assets or liabilities. As a result, the Group's balance sheet in 2002 contained
mismatches in the different segments of assets and liabilities created by the
economic policy of the government in 2002. Net financial income for FY 2002 was
the consequence of (i) said mismatches between assets and liabilities in terms
of their currency of denomination and in terms of whether they accrued only an
interest rate or a fixed interest rate determined by the government plus
principal adjustment by the CER and (ii) the differential evolution of interest
rates, the exchange rate and the CER index during the fiscal year. Net financial
income for FY 2002 amounted to Ps.1,226.6 million, representing a 4.34%
financial margin, lower than the 5.36% financial margin in FY 2001.

FY 2001 compared to annualized 2000

Net financial income reached Ps.1,734.9 million in FY 2001(including income of
Ps.286.8 million of government securities overcollateralizing repo
transactions), or a 5.2% increase compared to the annualized net financial
income of Ps.1,649.0 million accounted in the second half of 2000. This
variation in net financial income was the result of an increase of 54 b.p. in
the financial margin (6.42% in FY 2001compared to 5.88% in the second half of
2000) partially offset by a 3.7% decrease in the average interest-earning
assets.

Annualized net financial income for the second half of 2000 was Ps.1,649.0
million, resulting in a financial margin of 5.88%. This contrasts with a margin
of 6.07% for the twelve-month period ended June 30, 2000. The decrease in the
margin was the result of a decrease in the yield on the government securities
portfolio, due to the lower profits on the marked-to market portfolio.

PROVISION FOR LOSSES ON LOANS AND OTHER RECEIVABLES

FY 2002 compared to FY 2001

Provision for losses on loans and other receivables for FY 2002 reached
Ps.1,634.3 million (of which Ps.1,585.7 million were attributable to the loan
portfolio), 63.5% higher than in FY 2001.

This increase reflects the significant deterioration in the quality of the
Bank's portfolio in comparison with previous fiscal years, resulting from the
difficult economic situation undergone by Argentina during 2002 and the
government measures adopted by the government aimed at restructuring
private-sector debts. Within this context, Banco Galicia increased significantly
the allowance for loan losses and the coverage of the non-accrual loan portfolio
with allowances. As of December 31, 2002, the non-accrual loan portfolio
represented 13.08% of total loans and 35.46% of total loans to the private
sector. Due to the establishment of significant loan loss provisions in fiscal
year 2002, the allowance for loan losses amounted, as of December 31, 2002, to
Ps.1,667.3 million, 60.1% higher than in FY 2001, and the coverage of the
non-accrual loan portfolio with allowances reached 104.45% at the end of the
fiscal year and allowances as a percentage of total loans amounted to 13.66%.
The net charge to the income statement for loan losses (provisions charged to
income plus direct charge offs net of recoveries) in FY 2002 amounted to 8.05%
of average total loans (before the allowance for loan losses) as compared to
4.47% in FY 2001.

                                     -133-
<PAGE>

FY 2001 compared to annualized 2000

In FY 2001, provision for losses on loans and other receivables amounted to
Ps.999.8 million, or Ps.459.8 million higher than the annualized provisions for
the six-month-period ended December 31, 2000. This can be traced to the asset
quality deterioration caused by the long economic recession and its impact on
large and medium corporations during FY2001. The Ps.999.8 million amount is
comprises Ps.955.9 million of net provisions charged to income and Ps.41.9
million of direct charge offs.

For the six-month period ended December 31, 2000, annualized provisions for
losses on loans and other receivables amounted to Ps.540.0 million, of which
Ps.536.1 million were attributable to the loan portfolio. Of the Ps.536.1
million, Ps.503.3 million was net provisions charged to income while Ps.32.8
million were direct charge offs.

As of December 31, 2001, the Bank's overall allowance for loan losses amounted
to Ps.1,041.2 million, or Ps.450.3 million higher than the Ps.590.9 million
recorded as of December 2000. This increase was mainly the result of: (i) an
increase in the unallocated reserve from Ps.190.7 million to Ps.440.9 million;
(ii) an increase in the allowance for personal loans from Ps.76.0 million to
Ps.217.3 million; and (iii) an increase in the allowance for mortgage loans from
Ps.99.4 million to Ps.153.1million.

As of December 31, 2000, the Bank's overall allowance for loan losses amounted
to Ps.590.9 million, 3.3% higher than Ps.571.9 million as of June 30, 2000. This
increase was mainly the result of (i) an increase in the unallocated reserve
from Ps.173.9 million to Ps.190.7 million in the same period, which reflects, in
turn, an increase in the 1% regulatory reserve on normal loans, from Ps.125.6
million to Ps.137.8 million; (ii) an increase in the allowance for mortgage
loans from Ps.89.1 million as of June 30, 2000 to Ps.99.4 million as of December
31, 2000; and 3) an increase in the allowance for personal loans from Ps.51.1
million to Ps.57.5 million in the same period.

As of December 31, 2001, the non-accrual to total loans ratio increased to 6.74%
from December 31, 2000's level of 4.04%, mainly due to the credit quality
deterioration caused by the long economic recession.

As of December 31, 2000, the non-accrual to total loans ratio increased to 4.04%
from the June 30, 2000's levels of 3.95%, mainly due to the deterioration of the
credit quality of the mortgage loan portfolio, the personal loan portfolio and
the credit card loan portfolio (including loans granted by the regional credit
card companies) caused by the recession.

The allowance for loan losses as a percentage of total loans (excluding
interbanking loans) increased from 3.04% as of December 31, 2000, to 5.08% as of
December 31, 2001, mainly reflecting the credit quality deterioration mentioned
above, as well as an increase in the unallocated provision.

The allowance for loan losses as a percentage of total loans increased slightly
from 2.73% as of June 30, 2000 to 2.84% as of December 31, 2000, mainly
reflecting the establishment of higher reserves due to the deterioration of the
credit quality of the portfolios mentioned in the previous paragraphs. This in
turn was related to the persistence of the recession, during the second half of
2000, of the recession that affected Argentina since the second half of 1998.

As of December 31, 2001, the coverage of the non-accrual portfolio with
allowances for loan losses was 73.94%, compared to the 70.39% posted as of
December 31, 2000. This reflects an increase in the coverage of most types of
loans and an significant increase in the unallocated reserve covering loans that
are impaired but are not identified as impaired as of the balance sheet date.
This significant increase reflects the significant deterioration of the economic
and political environment in Argentina by year end 2001.

As of December 31, 2000, the coverage of the non-accrual portfolio with the
allowance for loan losses was 70.39%, slightly greater than the 69.08% June 30,
2000's level. This reflects an increase in this ratio for mortgage loans,
personal loans and pledged loans and in the unallocated reserve covering loans
that are impaired but are not identified as impaired as of the balance sheet
date.

                                     -134-
<PAGE>

NET INCOME FROM SERVICES

Net income from services consisted of:

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA                      BANCO GALICIA
                                                    ---------------------------------------------     --------------
                                                        FISCAL YEAR             SIX MONTHS             FISCAL YEAR
                                                     ENDED DECEMBER 31,      ENDED DECEMBER 31,       ENDED JUNE 30,
                                                    ---------------------------------------------     --------------
                                                      2002        2001              2000                  2000
--------------------------------------------------------------------------------------------------------------------
                                                          (In millions of December 31, 2002, constant pesos)

                                                                                       ANNUALIZED
                                                                                       ----------
<S>                                                 <C>        <C>          <C>        <C>            <C>
Income from
  Credit Cards..................................... Ps. 279.1  Ps.  576.0   Ps. 248.8  Ps.  497.6       Ps. 406.7
  Deposits Accounts................................      91.1       194.2        76.7       153.4           171.5
  Credit Related Fees..............................      29.8        35.8        17.5        35.0            40.4
  Check Collection.................................      10.2        19.7        10.5        21.0            23.6
  Collection Services (Taxes and Utility Bills) ...       6.9        13.8         8.1        16.2            19.7
  Foreign Trade....................................      14.0        23.4        12.9        25.8            25.8
  Insurance........................................      32.5        59.4        19.7        39.4            40.6
  Other (1)........................................      48.0       224.4       119.0       238.0           201.0
                                                    ---------------------------------------------       ------------
TOTAL INCOME                                        Ps. 511.6  Ps.1,146.7   Ps. 513.2  Ps.1,026.4       Ps. 929.3

TOTAL EXPENSES..................................... Ps. 139.4  Ps.  212.2   Ps.  95.3  Ps.  190.6       Ps. 181.6
                                                    ---------------------------------------------       ------------
NET INCOME FROM SERVICES........................... Ps. 372.2  Ps.  934.5   Ps. 417.9  Ps.  835.8       Ps. 747.7
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes among others, fees from market marking in goverment securities,
    investment banking activities, asset management, safety boxes and cash
    management.

                                     -135-
<PAGE>

FY 2002 compared to FY 2001

Net income from services reached Ps.372.2 million in FY 2002, 60.2% lower than
in FY 2001. This decrease mainly reflecfts the fact that services prices did not
increase in the same proportion as wholesale prices, and expereinced a lower
level of activity.

The table above shows that the decrease in net income from services was mainly
due to the decrease in fees from credit card activities, other fees and fees
from deposit accounts.

The following table sets forth the number of credit cards outstanding on the
dates indicated:

<TABLE>
<CAPTION>
                                                                                                                     % CHANGE
                                                             DECEMBER 31,                     JUNE 30,              DECEMBER 31,
                                             ----------------------------------------  ---------------------------------------------
CREDIT CARDS (1)                                  2002           2001         2000         2000          1999    2002/2001 2001/2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>           <C>           <C>          <C>          <C>       <C>
VISA........................................      423,397       597,577       593,624       579,297      519,728   (29.15)%    0.67%
   "Gold"...................................       59,547        67,047        60,058        54,287       34,963   (11.19)    11.64
   International............................      231,374       301,061       275,209       275,006      267,155   (23.15)     9.39
   Domestic.................................      130,081       225,136       254,851       246,873      215,174   (42.22)   (11.66)
   "Business"...............................        2,395         4,333         3,506         3,131        2,436   (44.73)    23.59
AMERICAN EXPRESS............................       67,254       106,543        73,457           -.-          -.-   (36.88)%   45.04%
   "Gold"...................................       25,014        33,867        21,888           -.-          -.-   (26.14)%   54.73%
   International............................       42,240        72,676        51,569           -.-          -.-   (41.88)    40.93
MASTERCARD..................................        7,971        24,179           -.-       128,311      155,812   (67.03)%     -.-
   "Gold"...................................        1,257         3,342           -.-        17,551       15,673   (62.39)%     -.-
   Mastercard...............................        6,714        19,868           -.-        77,221       94,684   (66.21)      -.-
   Argencard................................            0           969           -.-        33,539       45,455  (100.00)      -.-
REGIONAL CREDIT CARD COMPANIES (2)..........    1,097,838     1,188,739     1,023,909       944,469      885,954    (7.65)%   16.10%
  Visa......................................      426,075       332,354       152,836       120,068       47,772    28.20%   117.46%
  Local Brands..............................      671,763       856,385       871,073       824,401      838,182   (21.56)    (1.69)
                                               --------------------------------------- ---------------------------------------------
TOTAL ......................................    1,596,460     1,917,038     1,690,990     1,652,077    1,561,494   (16.72)%   13.37%
AMOUNT OF PURCHASES (in millions of Dec.31,
  2002, constant Pesos)..................... Ps.  2,402.8  Ps.  5,001.0  Ps.2,454.4(3) Ps.  4,506.0 Ps.  3,634.7   (51.95)%  103.76%
                                                                         Ps.4,908.8(4)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Issued by Banco Gaicia and subsidiaries.

(2) Corresponds to Tarjeta Naranja SA, Tarjeta Comfiar SA, Tarjetas Cuyanas SA,
    Tarjetas del Mar SA. and Tarjetas del Sur S.A.

(3) For the six-month period ended December 31, 2000.

(4) Annualized.

Income from credit cards, totaling Ps.279.1 million, included Ps.158.5 million
related to the regional credit-card companies, which were managing 1,097.8
thousand cards as of December 31, 2002. Due to the significant decrease in
overall economic activity suffered by the Argentine economy during most of 2002
that translated into higher unemployment and lower real wages and lower
consumption, credit-card use showed a 52% decline when compared with FY 2001.
This decrease is also partially explained by the restatement of the FY 2001
figure by inflation. The number of credit cards managed by these companies
decreased by 7.6% in FY 2002.

Excluding the regional credit-card companies, the Bank's total income from
credit cards was Ps.122.7 million for FY 2002. The use of these cards in 2002
was 50.7% lower than in FY 2001. This decrease is also partially explained by
the restatement of the FY 2001 figure by inflation. The number of other credit
cards managed by the Bank was 498,600 as of December 31, 2002, compared with
728,300 recorded at December 31, 2001.

The Bank's total deposit accounts amounted to 1.06 million as of December 31,
2002, 52.3% lower than at the same date of the last year. This decline was due
to the closing of the accounts denominated in foreign currency held at the Bank
in Argentina, as a result of the pesification of deposits occurred in the
financial system during the year, and to a lesser extent by the closing of
accounts by customers.

                                     -136-
<PAGE>

The number of policies administered by the Bank as of December 31, 2002,
considering property insurance contracts and life and retirement policies,
amounted to 229,000 as compared to 289,000 as of December 31, 2001.

The decline in credit related fees reflects the decrease in the private-sector
loan portfolio.

The decrease in other fees is related to the fact that activity in investment
banking, asset management, market-making in government securities and lending to
the government was significantly reduced in FY 2002.

Expenses from services included non-recurring expenses for US$10 million, on
account of payments in connection with structured-note transactions paid off
prior to maturity.

FY 2001 compared to annualized 2000

Net income from services for FY 2001 was Ps.934.5 million, 11.8% higher than the
annualized Ps.835.8 million posted in the second half of 2000. The most
significant income sources were credit cards, deposit accounts, as well as
insurance products. This increase was partially offset by lower fees related to
loans granted to the government, included in the "Other" category.

Credit card income of Ps.576.0 million included Ps.349.5 million from Tarjetas
Regionales S.A. and its subsidiaries. As of December 31, 2001, regional credit
card companies managed 1.19 million plastics, compared to the 1.02 million cards
outstanding one year before. It is important to note that in the last Ordinary
and Extraordinary Shareholders' Meeting held on September 26, 2001, Banco
Galicia's shareholders decided to change its fiscal year-end from June to
December. Regional credit card companies adapted their fiscal year to that of
the Bank, originating a 13-month irregular fiscal year for these companies in
the period under consideration. Plastics managed by the Bank rose from 667,000
as of December 31, 2000 to 728,000 as of December 31, 2001.

Total income from credit card operations, excluding regional credit card
companies, amounted to Ps.226.5 million.

Higher insurance products' fees were mainly related to life and retirement
products.

As of December 31, 2001, the total number of Banco Galicia's deposit accounts
amounted to 2.2 million, or 21.0% higher than the amount recorded as of December
31, 2000, as a consequence of a significant "bancarization" process induced by
the cash withdrawal restrictions introduced by the government in December 2001
(known as the "corralito").

As of December 31, 2000, the total number of Banco Galicia's deposit accounts
amounted to 1.82 million, 3.4% higher than the amount recorded as of June 30,
2000.

The increase in fee income improved the fee income to administrative expenses
ratio to 68.81% in FY 2001 compared to 63.37% in the second half of FY 2000.

In the half-year ended December 31, 2000, the percentage of administrative
expenses covered by income from services reached 63.37%. This compares to a
ratio of 56.34% for the year ended June 30, 2000. This indicates that the
expansion of services offered to customers has been achieved at only a marginal
increase in administrative expenses.

MONETARY LOSS FROM FINANCIAL INTERMEDIATION

The monetary loss from financial intermediation amounted to Ps.1,425.3 million,
representing the effect of inflation on financial income, income from services
and loan loss provisions. This in turn, mainly represents the loss caused by the
exposure of the Group's liquid shareholders' equity (shareholders' equity less
fixed assets and equity investments) to inflation, measured by the variation of
the price index used to restate financial statements for inflation (the
wholesale price index).

                                     -137-
<PAGE>

ADMINISTRATIVE EXPENSES

The following table sets forth the components of administrative expenses:

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA                       BANCO GALICIA
                                                    ---------------------------------------------     -------------
                                                     FISCAL YEAR ENDED       SIX MONTHS ENDED            FY ENDED
                                                       DECEMBER 31,            DECEMBER 31,              JUNE 30,
                                                    ---------------------------------------------     -------------
                                                     2002        2001              2000                   2000
-------------------------------------------------------------------------------------------------------------------
                                                          (In millions of December 31, 2002, constant pesos)
<S>                                                 <C>         <C>        <C>        <C>             <C>
Salaries and Social Security Contributions.......   Ps. 431.5   Ps. 592.2  Ps. 293.8   Ps. 587.6       Ps.  558.3
Property-Related Expenses........................        99.1       123.2       56.6       113.2            109.9
Personnel Services...............................        23.4        54.0       28.0        56.0             51.8
Advertising and Publicity........................        15.2        54.1       33.0        66.0             60.4
Amount Accrued in Relation with Directors and
  Syndics' Compensation..........................         3.2        35.1       26.0        52.0             80.2
Electricity and Communications...................        42.1        69.7       36.0        72.0             76.7
Taxes............................................        57.3        83.8       23.2        46.4             51.6
Other............................................       267.5       346.0      162.9       325.8            338.4
                                                    --------------------------------------------      -----------
TOTAL ...........................................   Ps. 939.3   Ps.1358.1  Ps. 659.5  Ps.1,319.0       Ps. 1327.3
-----------------------------------------------------------------------------------------------------------------
</TABLE>

FY 2002 compared to FY 2001

In FY 2002, administrative expenses, net of the monetary effect, totaled
Ps.918.5 million, 32.4% lower than the Ps.1,358.1 million recorded in FY 2001.

In FY 2002, Banco Galicia made good progress in streamlining its organizational
structure and administrative expenses in order to adapt to a context that
radically changed; a process that mainly took place during the second half of
the year. In this effect, the Bank reduced its branch network in Argentina by 61
branches equivalent to 21.1% of those existing as of December 31, 2001, and that
the Galicia Ahora service centers network was totally absorbed by the branch
network. Similarly, through voluntary retirement plans, the Bank's staff
decreased by 1,804 people or 30.7% of the Bank's staff as of December 31, 2001.
This does not include the decrease in the staff of other companies consolidated
by the Group. The staff of these companies decreased by 639 employees during FY
2002, mainly representing a reduction in the regional credit-card companies'
staff. In addition these companies also reduced their distribution network by 16
service centers, 15.5% of those existing as of December 31, 2001. Moreover, the
Bank renegotiated all of its lease agreements and those contracts entered into
with the system, communications and other suppliers.

Expenses related to salaries and social security contributions totaled Ps.431.5
million, 27.1% lower than in FY 2001. This amount includes Ps.130 million on
account of restructuring charges. Net of said amount, personnel expenses for the
period amounted to Ps.301.5 million, 49.1% lower than in FY 2001. This decrease
is partially due to the restatement of the FY 2001 figure by inflation.

Other administrative expenses totaled Ps.507.8 million, 33.7% lower than in FY
2001. All components of this category suffered reductions. Personnel services
and Directors' and Syndics' fees where the items showing the greatest percentual
declines.

FY 2001 compared to annualized 2000

Total administrative expenses amounted to Ps.1,358.1 million, or 3% higher than
the Ps.1,319.0 million annualized administrative expenses recorded in the second
half of 2000. Regional credit card companies' administrative expenses totaled
Ps.251.6 million in FY 2001. Had these companies' administrative expenses been
excluded, the Group's administrative expenses would have increased slightly 0.9%
in the same period.

Annualized administrative expenses totaled Ps.1,319.0 million in the second half
of 2000. Of this amount, Ps.222.4 million corresponded to Tarjetas Regionales
S.A. and its subsidiaries.

                                     -138-
<PAGE>

The efficiency ratio deteriorated to 57.00% as of December 31, 2001, from last
year's level of 53.09%. This reflects the decrease of net interest income during
2001 and the increase in costs.

The efficiency ratio fell from 57.04% for the year ended June 30, 2000 to 53.09%
for the six month period ended December 31, 2000. This shows that the Group was
able to increase both interest and service revenues while managing to control
costs.

Personnel expenses totaled Ps. 592.2 million in FY 2001. Grupo Galicia's total
payroll headcount was 8,610, or a 6.3% reduction compared to the 9,188 employees
as of December 2000. This reduction can be traced to a reduction in regional
credit cards' employees.

Annualized expenses related to salaries and social security contributions were
Ps.587.6 million for the six months ended December 31, 2000. The number of Grupo
Galicia's employees grew 3.6% to 9,188 as of December 31, 2000, from 8,868 as of
June 30, 2000, basically as a result of additions to personnel at the regional
credit card companies.

Administrative expenses other than salary totaled Ps.765.9 million in FY 2001.
The increase in "taxes", is due to the new tax on financial transactions which
was implemented in April 2001. In the "Other" item, there were higher
expenditures related to hired administrative services, funds' transfer and the
amortization of development and organization expenses. In addition, expenses
related to fixed assets also increased. It should be highlighted that Banco
Galicia absorbed 22 branches pertaining to ABN AMRO Bank Argentina in October
15, 2001, in connection with the acquisition of said bank's retail operations.
From that moment on, Banco Galicia had 19 more branches and 270 more employees
as a result of this acquisition. On the other hand, advertising expenses and
Directors' and Syndics' fees showed a reduction when compared to the annualized
amounts corresponding to the previous six months. Directors' and Syndics' fees
decreased due to the lower net income achieved in FY 2001.

The annualized remaining administrative expenses totaled Ps.731.4 million in the
half year ended December 31, 2000. Excluding the annualized portion of these
expenses attributable to Tarjetas Regionales S.A. and its subsidiaries, the
total was Ps.590.7 million. Administrative expenses excluding salaries and
social security contributions fell as a proportion of total administrative
expenses for the six months ended December 31, 2000, compared to the year ended
June 30, 2000. This was mainly due to a reduction in the compensation of
Directors and Syndics. Beginning July 2000, the Board of Directors' honorarium
set forth in the by-laws at 12% of the Bank's earnings was replaced by a new
incentive-based compensation plan. A limit of 6% of the same base has been set
for the new compensation plan. Provisionally, the Board of Directors' new
compensation plan was accrued at the established limit of 6% of earnings. In
addition, during the half-year ended in December 31, 2000, savings were effected
on expenses related to the categories of "Electricity and communications" as
well as "Stationery and office supplies." Amortization charges related to
organization and development expenses were also reduced.

INCOME (LOSS) FROM EQUITY INVESTMENTS

FY 2002 compared to FY 2001

Income (loss) from equity investments recorded a loss of Ps.51.5 million. This
loss was mainly due to the losses recorded by Aguas Argentinas S.A. (Ps.25.3
million), Aguas Provinciales de Santa Fe S.A. (Ps.17.3 million), Tradecom
Netherlands (Ps.12.7 million) and Aguas Cordobesas S.A. (Ps.6.8 million).

FY 2001 compared to annualized 2000

Income from equity investments reached Ps.34.7 million in FY 2001. This amount
included Ps.26.0 million income from the sale of the stake in Banco Barclays e
Galicia S.A., Ps.9.6 million income from Galicia Capital Markets S.A. and Ps.5.7
million income from Banelco S.A. In addition, a Ps.4.8 million dividend from
Aguas Argentinas S.A. and a Ps.12.5 million loss from Correo Argentino S.A. were
also included in this amount.

In the six-month period ended December 31, 2000, equity investments resulted in
an annualized loss of Ps.19.4 million. This loss was basically a result of
annualized losses of Ps.28.8 million from Correo Argentino S.A. and Ps.14.9
million from Banco Barclays e Galicia S.A. These losses were partially offset by
annualized gains of Ps.10.0 million from the

                                     -139-
<PAGE>

sale of the Bank's 49% interest in Inversora en Distribucion de Entre Rios S.A.
and of Ps.7.4 million representing the annual dividend of Aguas Argentinas S.A.

MISCELLANEOUS NET INCOME

FY 2002 compared to FY 2001

Miscellaneous net income (loss), net of the associated monetary loss, showed a
Ps.587.5 million loss. This loss was, mainly, the result of the establishment of
allowances for contingencies related with the Bank's interests in non-financial
companies and with the Galtrust I Financial Trust, and for the amortization of
certain goodwill.

FY 2001 compared to annualized 2000

Net other income of Ps.382.6 million were Ps.339.8 million higher than the
annualized net income of Ps.42.8 million accounted in the second half of 2000.
FY 2001 net income principally included Ps.286.8 million of income on government
securities that overcollateralize repo transactions and Ps.113.6 million
corresponding to the reversal of income tax provisions. This income tax
provision had been established in order to afford income tax payments that could
become due on the income that could be generated as a result of the difference
between the market value and the book value of government securities held in the
investment account. Given that these government securities were exchanged for
secured loans in November 2001, the provision was reversed.. Finally, Ps.69.7
million charges for other provisions were accounted in the same line.

Annualized miscellaneous net income amounted to Ps.42.8 million in the six-month
period ended December 31, 2000.

LOSS ABSORPTION

Communique "A" 3800 from the Argentine Central Bank offered financial
institutions the option to absorb the losses recorded during fiscal year 2002
with and up to the balances of the shareholders' equity accounts "Retained
Earnings and "Unrealized Valuation Difference", subject to the approval by the
Board of Directors and to the final resolution adopted by the Annual
Shareholders' Meeting on this respect. The annual meeting of the shareholders of
the Bank, held on April 30, 2003, approved such absorption.

Under "Absorption subject to the Approval of the Shareholders' Meeting, "
Ps.1,358.2 million are shown, equivalent to 93.59% of Banco Galicia's gain from
the revaluation of its net asset foreign currency position as of December 31,
2001, from Ps.1 to Ps.1.4 per US dollar. This gain amounted to Ps.1,451.3
million and was recorded by the Bank under the Shareholders' Equity account
"Unrealized Valuation Difference." The balance of this account was used by the
Bank to absorb losses for the same amount.

INCOME TAX

FY 2002's income tax expense amounted to Ps.65.9 million. This expense is mainly
explained by the fact that the holding company began to apply the deferred tax
method in 2002. This implied the recognition of a deferred liability of Ps.53.7
million and an income tax expense for the same amount. Ps.5 million was the tax
provision of the holding company. The remaining income tax expense was mainly
due to the charges recorded by Galicia Factoring y Leasing S.A. (Ps. 1.8
million) and Galicia Valores S.A. (Ps. 3.4 million).

The variation in the Group's shareholders' equity in FY 2002 showed a Ps.1,452.2
million loss. This figure differs from the reported net income due to the fact
that the Group began to apply the deferred tax method in 2002. This implied the
recognition of an adjustment to the previous fiscal year's net income for Ps.6.6
million.

FY 2001's income tax totaled Ps.157.7 million, which represented an annual
effective tax rate of 37.5% and the annualized income tax charge for the second
half of 2000 was Ps.228.8 million, representing an annual effective rate of
36.82%.

                                     -140-
<PAGE>

US GAAP AND ARGENTINE BANKING GAAP RECONCILIATION

GENERAL

Grupo Galicia and Banco Galicia prepare their financial statements in accordance
with Argentine Banking GAAP. The more significant differences between Argentine
Banking GAAP and US GAAP relate to the determination of the allowance for loan
losses, the carrying values of certain government securities and receivables for
government securities, foreign currency translation and recognition of deferred
income taxes. For more detail on differences in accounting treatment between
Argentine Banking GAAP and US GAAP through December 31, 2002, See note 39 to our
annual consolidated financial statements.

The differences mentioned above do not include the reversal of the adjustments
to the financial statements for the effects of inflation required under
Argentine Banking GAAP as the application of inflation accounting represents a
comprehensive measure of the effects of wholesale price level changes in the
Argentine economy and as such, is considered a more meaningful presentation than
historical-based financial reporting for U.S. GAAP purposes.

With respect to the determination of the allowance for loan losses, Banco
Galicia follows the rules of the Argentine Central Bank. Under these rules,
reserves are based on minimum reserve requirements established by the Argentine
Central Bank. U.S. GAAP requires that an impaired loan be generally valued at
the present value of expected future cash flows discounted at the loan's
effective rate or at the fair value of the collateral, if the loan is collateral
dependent.

During the fiscal year ended December 31, 2001, and as a consequence of Decree
No.1387/01, the Group swapped effective as of November 6, 2001, its Argentine
national government debt instruments, under the Promissory Note/Bond program,
for secured loans. As established by article 20 of the above mentioned decree,
the conversion for Argentine Banking GAAP purposes was made at the nominal
value, at a rate of exchange of $ 1=US$1 and in the same currency as that of the
converted obligation. The Argentine Central Bank provided that the difference
between the nominal value of the secured loans and the book value of the
instruments exchanged (in the case of securities, classified and valued as
"investment accounts" or "for trading purposes", under Argentine Central Bank
rules) must be credited to income and added to the recorded amount included in
"Loans - To the Non-Financial Public Sector" on a monthly basis, in proportion
to the term of each of the secured loans received.

In accordance with US GAAP, satisfaction of one monetary asset (in this case a
debt security) by the receipt of another monetary asset (in the case a secured
loan) for the creditor is generally based on the market value of the asset
received in satifaction of the debt. In this particular case, the secured loan
being received was significantly different in structure and in interest rates
than the debt securities swapped. Therefore, the fair value of the loans was
determined on the balance sheet date based on the contractual cash flows of the
loan received discounted at an estimated market value. The estimated fair value
of the loan received consitute the cost basis of the asset. The difference
between the cost basis and amounts expected to be collected is amortized on an
effective yield basis over the life on the loan.

In addition, the Bank had offered to exchange its loans to Argentine provincial
governments for secured loans, pursuant to the above mentioned Decree.
Subsequently, pursuant to Decree No.1579/02 of August 28, 2002, the Group
tendered its portofio of loans to Argentine provincial governments for secured
loans issued by the FFDP with different terms and conditions. This swap has not
been completed at the date hereof. The Group has other loans to the Argentine
provincial public sector, that in addition to the aforementioned loans are
considered to be impaired under US GAAP in accordance with Statement of
Financial Accounting Standards No.114. Accordingly the Group has established an
allowance for loan losses on loans to the Argentine provinces.

Government securities and certain other securities that are included under
investment accounts under Argentine Central Bank rules, are considered as
available for sale under US GAAP.

The Compensatory Bonds received or receivable by the Bank should initially be
recognized at their market value (limited to the amounts of the loss suffered by
the Bank in connection with the" asymmetric pesification"). Thereafter,
Compensatory Bonds would be classified as available for sale and recognized at
market with the gain or

                                     -141-
<PAGE>

loss recognized as a charge or credit to equity through other comprehensive
income. In connection with estimating the fair value of the Compensatory Bonds,
the Bank used quoted market values. There has been limited activity in the
trading of these securities and as such, the quoted market values may not
represent the price of an actual sale between a willing buyer and a willing
seller.

In connection with the Bank's right (but not the obligation) to purchase the
Hedge Bonds, the Bank has recognized the right to purchase the Hedge Bonds at
their equivalent value as if the Bank had the associated bonds in their
possession, and recognized the associated liability to fund the Hedge Bonds as
if the Bank had executed the debt agreement with the Central Bank. The
receivable is denominated in US. dollars bearing interest at 2% whereas the
liability to the Central Bank is denominated in pesos with interest being
accrued at CER plus 2%, each retroactive to February 3, 2002.

Under US GAAP the right to purchase the Hedge Bonds is not considered an asset
under Financial Accounting Standards Board Statement of Concepts No. 6 Elements
of Financial Statements (CON 6). Under CON 6, assets are defined as "...probable
future economic benefits obtained or controlled by an entity as a result of past
transactions or events". In addition, one of the three essential characteristics
of an asset include that an entity can obtain the benefit and control others'
access to it. As of December 31, 2002, the Bank can not obtain the benefit of
the Hedge Bonds to be purchased until such time as the transaction becomes
approved by the Argentine Central Bank and the Bank remits funds to the
Argentine Central Bank. The liability under U.S. GAAP would be recognized when
the Bank enters into the financing arrangement.

As of December 31, 2002, the Bank had recorded under "Other Receivables from
Financial Brokerage" the difference arising from the reimbursement of
restructured deposits at the market exchange rate pursuant to judicial orders
and the carrying value of these restructured deposits, for Ps.442.3 million.

Under U.S. GAAP the right to obtain this compensation is not considered an asset
under Financial Accounting Standards Board Statement of Concepts No. 6 Elements
of Financial Statements (CON 6). Under CON 6, assets are defined as "...probable
future economic benefits obtained or controlled by an entity as a result of past
transactions or events". In addition, one of the three essential characteristics
of an asset include that an entity can obtain the benefit and control others'
access to it. As of December 31, 2002, the Bank can not obtain the benefit of
the compensation until such time as the compensation becomes approved by the
National Government and the Argentine Central Bank.

With respect to foreign currency exchange differences, the official exchange
rate between the US dollar and the Argentine peso in Argentina was 1 to 1 at
December 31, 2001 and for Argentine GAAP purposes, this rate was used to
translate all US dollar denominated assets and liabilities at December 31, 2001.
For U.S. GAAP purposes, foreign currency transactions should be translated at
the applicable rate at which those particular transactions could be settled at
the balance sheet date. In anticipation of an announced devaluation, "exchange
houses" in Argentina (used for limited personal transactions and not for
settling business transactions) started exchanging dollars at 1.4 or more pesos
to the dollar prior to December 31, 2001. Such exchange houses were closed at
December 31, 2001. Through January 10, 2002, no transactions were conducted in
US dollars and there was no exchangeability between the peso and the dollar.
Under Statement of Accounting Standards No. 52, if the exchangeability between
two currencies is temporarily lacking at the balance sheet date, the first
subsequent rate at which exchanges could be made is used for translating foreign
currency transactions. In this case, the January 11 exchange rate of Ps. 1.6 per
US$1 was the first available rate after year end and thus that rate was used for
U.S. GAAP purposes to translate US dollar denominated assets and liabilities at
December 31, 2001.

In addition, Grupo Galicia's equity holdings in Argentine companies were
similarly adjusted under U.S. GAAP for its proportional effect of applying the
1.6 to 1 exchange rate to the U.S. dollar denominated assets and liabilities of
such companies at December 31, 2001.

Under Argentine Banking GAAP, certain costs such as the set up costs for
branches, termination costs, and Year 2000 compliance costs are deferred and
amortized. Under US GAAP, these costs are expensed as incurred.

As a result of the above and other differences, net income and shareholders'
equity for Grupo Galicia and Banco Galicia under Argentine Banking GAAP and US
GAAP for the periods indicated were as follows:

                                     -142-
<PAGE>

<TABLE>
<CAPTION>
                                               NET INCOME (LOSS)                 SHAREHOLDERS' EQUITY (DEFICIT)
                                        ------------------------------------------------------------------------
                                        ARGENTINE BANKING                      ARGENTINE BANKING
                                               GAAP            U.S. GAAP             GAAP           U.S. GAAP
----------------------------------------------------------------------------------------------------------------
                                                   (in millions of December 31, 2002, constant pesos)
<S>                                     <C>                 <C>                <C>                 <C>
GRUPO GALICIA
Fiscal Year 2002..................         Ps. (1,458.8)    Ps.  (418.8)            Ps. 1,624.5    Ps. (5,375.5)
Fiscal Year 2001..................                262.3        (8,563.7)                3,076.7        (5,836.9)
Six Months ended December 31, 2000                196.4           214.7                 2,885.2         2,668.8

BANCO GALICIA
Fiscal Year 2000..................         Ps.    341.4     Ps.   358.3             Ps. 2,910.0    Ps.  2,648.1
Fiscal Year 1999..................                329.0           326.3                 2,644.7         2,226.1
Fiscal Year 1998..................                249.7           152.5                 2,378.0         2,094.2
----------------------------------------------------------------------------------------------------------------
</TABLE>

LOAN LOSS RESERVES UNDER US GAAP

For the purposes of analyzing its loan loss reserve under U.S. GAAP, Banco
Galicia divides its loan portfolio into performing and non-performing commercial
and consumer loans.

         Performing Commercial and Consumer Loans

Performing loans are considered to be loans that are classified under the
Argentine Central Bank classification guidelines as:

-        "Normal" and "Normal Performance"

-        "Potential Risk" and "Improper Fulfillment"

Banco Galicia performs analyses of historical losses from the performing
commercial and consumer loan portfolios in order to estimate losses for U.S.
GAAP purposes resulting from loan losses that have been incurred in the
performing loan portfolio at the balance sheet date but which have not been
individually identified.

Banco Galicia estimates that on average it takes a period of up to one year
between the trigger of an impairment event and the identification of a loan as
being a probable loss. Therefore, Banco Galicia has concluded that the losses
incurred by the performing loan portfolio over the next year give a basis for
estimating the amount of loss at the balance sheet date. The Bank has collected
data on the amounts of losses that have been incurred on commercial loans and
consumer loans that were performing one year before. Using this data, the range
of estimated default probabilities and estimated losses given default yield the
following estimated SFAS 5 reserve for the performing commercial and consumer
loan portfolio.

<TABLE>
<CAPTION>
                                    DECEMBER 31, 2002   DECEMBER 31, 2001    DECEMBER 31, 2000      JUNE 30, 2000
                                  ---------------------------------------------------------------------------------
                                     HIGH      LOW       HIGH       LOW       HIGH      LOW       HIGH       LOW
-------------------------------------------------------------------------------------------------------------------
                                                 (in millions of December 31, 2002, constant pesos)
<S>                               <C>        <C>       <C>        <C>       <C>       <C>        <C>       <C>
Performing Commercial Loan......  Ps. 240.8  Ps. 18.9  Ps. 286.2  Ps. 28.0  Ps. 86.1  Ps. 31.0   Ps. 53.3  Ps. 33.0
Performing Consumer Loans.......  Ps. 110.3  Ps.101.5  Ps. 205.8  Ps.181.7  Ps.184.6  Ps.149.6   Ps.164.3  Ps. 90.2
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         Non-Performing Consumer Loan Portfolio

The non-performing consumer loan portfolio is defined as representing the
following portfolio under the Argentine Central Bank classification system:

-        "Defective Fulfillment"

-        "Difficulty in Recovery"

-        "Uncollectible"

                                     -143-
<PAGE>

For these loans, Banco Galicia has developed a range of loss projections based
on the default experience of non-performing loans. Based on this data, Banco
Galicia has calculated a range of estimated loan losses for non-performing
consumer loans.

<TABLE>
<CAPTION>
                                    DECEMBER 31, 2002     DECEMBER 31, 2001     DECEMBER 31, 2000      JUNE 30, 2000
                                  --------------------------------------------------------------------------------------
                                     HIGH       LOW       HIGH       LOW         HIGH       LOW       HIGH       LOW
------------------------------------------------------------------------------------------------------------------------
                                                 (in millions of December 31, 2002, constant pesos)
<S>                               <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Non-Performing Consumer Loans...  Ps. 246.6  Ps. 226.5  Ps. 385.8  Ps. 330.7  Ps. 310.4  Ps. 250.6  Ps. 338.6  Ps. 188.7
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         Non-Performing Commercial Loans

The non-performing commercial loan portfolio is defined as representing the
following portfolio under the Argentine Central Bank classification system:

-        "With Problems"

-        "High Risk of Insolvency"

-        "Uncollectible"

For the non-performing commercial loans Banco Galicia applied the procedures
required by SFAS 114.

For loans that were not collateral dependent, the expected future cash flows to
be received from the loans were discounted using the interest rate at each
balance sheet date for variable loans. Loans that were collateral dependent, and
where there was an expectation that the loan balance would be recovered via the
exercise of collateral, were valued using the fair value of the collateral. In
addition, in order to assess the fair value of collateral, Banco Galicia has
discounted collateral valuations, due to the extended period of time that it can
take to foreclose assets under the Argentine judicial system.

         Summary

The following table identifies the high and low of loan loss reserves for the
periods indicated.

<TABLE>
<CAPTION>
                                        DECEMBER 31, 2002        DECEMBER 31, 2001      DECEMBER 31, 2000       JUNE 30, 2000
                                   ----------------------------------------------------------------------------------------------
                                      HIGH          LOW          HIGH         LOW       HIGH        LOW        HIGH       LOW
---------------------------------------------------------------------------------------------------------------------------------
                                                  (in millions of December 31, 2002, constant pesos)
<S>                                <C>          <C>          <C>          <C>          <C>        <C>        <C>        <C>
Performing Commercial Loans.....   Ps.   240.8  Ps.    18.9  Ps.   286.2  Ps.    28.0  Ps.  86.1  Ps.  31.0  Ps.  53.3  Ps.  33.0
Performing Consumer Loans.......   Ps.   110.3  Ps.   101.5  Ps.   205.8  Ps.   181.7  Ps. 184.6  Ps. 149.6  Ps. 164.3  Ps.  90.2
Non-Performing Consumer Loans...   Ps.   246.6  Ps.   226.5  Ps.   385.8  Ps.   330.7  Ps. 310.4  Ps. 250.6  Ps. 338.6  Ps. 188.7
Non-Performing Commercial Loans.   Ps. 1,022.6  Ps. 1,022.6  Ps. 1,197.7  Ps. 1,197.7  Ps. 151.4  Ps. 151.4  Ps. 140.9  Ps. 140.9
                                   ----------------------------------------------------------------------------------------------
TOTAL...........................   Ps. 1,620.3  Ps. 1,369.5  Ps. 2,075.5  Ps. 1,738.1  Ps. 732.5  Ps. 582.6  Ps. 697.1  Ps. 452.8
                                   ----------------------------------------------------------------------------------------------
LOAN LOSS RESERVE UNDER U.S. GAAP......  Ps. 1,619.9               Ps. 1,927.5               Ps. 612.7            Ps. 605.1
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For the year ended June 30, 2000, Banco Galicia expected that the loans loss
reserve under U.S. GAAP would fall more toward the midpoint of the range after
the charge-offs of accumulated unsecured consumer loans. As of December 31,
2000, Banco Galicia expected that the loans loss reserve would fall more toward
the lower end of the range due to the increase of the impaired consumer loans
and to the positive variation of the transfer of impaired loans covered by a
100% allowance, to the memorandum accounts. As of December 31, 2001, Banco
Galicia expected that the loans loss reserve under US GAAP would fall more
toward to the midpoint of the range after the charge-offs of accumulated
unsecured consumer loans and the increase of the loan loss reserve under FAS 114
of the impaired loans. As of December 31, 2002, Banco Galicia expected that the
loan loss reserve under US GAAP would fall more towards the high point of the
range after the charge offs of accumulated unsecured consumer loans. The reserve
under US GAAP would be in that range due to the recording of substantial losses
caused by the situation in Argentina in 2002, partially offset by the decrease
of the loan loss reserve of the impaired loans under FAS 114, due to the effect
of inflation.

                                     -144-
<PAGE>

In addition to assessing the reasonableness of the loan loss reserve as
described above, Banco Galicia makes an overall determination of adequacy of
each period's reserve based on such ratios as:

-        Loan loss reserves as a percentage of non-accrual loans

-        Loan loss reserves as a percentage of total amounts past due

-        Loan loss reserves as a percentage of past-due unsecured amounts.

RESULTS BY SEGMENTS

GENERAL

Banco Galicia is Grupo Galicia's most significant subsidiary. In addition, Grupo
Galicia has an 87.5% direct interest in Sudamericana Holding S.A. (in which
Banco Galicia holds a 12.5% stake), an 87.5% direct participation in Net
Investment S.A. (Banco Galicia owns the remaining 12.5% stake) and an 87.5%
direct interest in Galicia Warrants S.A., where Banco Galicia holds the other
12.5%. On September 19, 2001, Grupo Galicia increased its participation in
Sudamericana Holding S.A. to 87,5% from 37.5%, obtaining the control of
Sudamericana Holding S.A. while Banco Galicia holds the remaining 12.5%. During
2001, Grupo Galicia also acquired 87.5% of Galicia Warrants, a company focused
on the granting of warrants and deposit's certificates to agriculture clients.

As a consequence, Grupo Galicia's main segments are:

-    the "Grupo Galicia" segment showing the holding company's specific income
     and expenses not attributable to its investments in subsidiaries, except
     for goodwill amortization;

-    the "Insurance" segment, corresponding to Sudamericana Holding S.A.'s
     consolidated results of operations (that is including the 12.5% interest
     owned by the Bank)

-    the "Other Grupo's Businesses" segment representing the results operations
     of Net Investment S.A. consolidated and Galicia Warrants S.A. (in both
     cases, including the results of the 12.5% interests of the Bank).

-    Banco Galicia's operating segments (see below).

The column "Corporate Adjustments" includes intercompany transactions that are
eliminated and the results corresponding to the minority interests in Banco
Galicia, Sudamericana Holdings S.A., Net Investments S.A. and Galicia Warrants
S.A.

The operating segments employed by Banco Galicia's management for operating
decisions and for assessing performance are based on the following criteria:

     -   the geographical location of each branch or business, or "unit"

     -   the similarity of the businesses conducted with or the services
         provided to Banco Galicia's customers

     -   the existence of homogeneous groups of customers to which products and
         services are provided

Banco Galicia's operating segments are:

Buenos Aires Metropolitan Branches--corresponds to business conducted with
customers in branches located in the Federal District and the Greater Buenos
Aires area.

Rest of the Country Branches--corresponds to business conducted with customers
in branches located in Argentina but outside the Federal District and the
Greater Buenos Aires area.

Home Office--corresponds to business conducted with customers in Banco Galicia's
home office and with the national and provincial public sectors.

Regional Credit Cards--corresponds to the results from Banco Galicia's
investments in the operating regional credit card companies and Tarjetas
Regionales S.A (the regional credit-card companies' holding company).

                                     -145-
<PAGE>

International--corresponds to the business of Galicia Uruguay, Banco Galicia's
foreign branches and other international subsidiaries.

Other Financial Businesses--corresponds to the business of Galicia Capital
Markets S.A., Galicia Valores S.A., Agro Galicia S.A. and Galicia Factoring y
Leasing S.A. In addition this segment includes the results of the equity
investments of the Bank in financial-related companies not required to be
consolidated, where the Bank holds minority interests.

Other Equity Investments--corresponds to Banco Galicia's participation in
various infrastructure and public utility services companies. Until Banco
Galicia's fiscal year ended June 30, 2000, the Bank's minority interest in its
insurance subsidiary Galicia Vida Compania de Seguros S.A. was included under
this segment.

The net financial income of each unit is determined based on the financial
income and financial expenses generated by the assets and liabilities located in
each unit and through the use of transfer prices to compensate the lending unit
and to charge the borrowing unit, based on Banco Galicia's average margin by
currency and type of funds for the same month. Each unit is also allocated its
income from services, provisions for loan losses and other income generated by
the assets managed by such unit.

The distribution of administrative expenses is made based on the information
arising from the cost system, which gathers from the accounting system the
allocation of the expenses by unit, and appropriates to each unit the cost of
the support provided to it by the rest of the organization.

Below is a discussion of Grupo Galicia's results of operations by segment for
the years ended December 31, 2002 and 2001 and for the six-month period ended
December 31, 2000, based on the existing Banco Galicia segments. Grupo Galicia's
results by segment are shown in note 36 to the audited consolidated financial
statements.

RESULTS BY SEGMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

Grupo Galicia--This segment, considering only the holding company structure,
posted a net loss of Ps.30.5 million in fiscal year 2002, mainly attributable to
(i) a Ps.167 million monetary loss from financial intermediation and (ii) the
recording of a Ps.53.7 million deferred tax liability that implied an income tax
charge for the same amount, in accordance with applicable regulations for
commercial companies. The net financial income line mainly shows the results
from the revaluation of Grupo Galicia's dollar-denominated deposits in Galicia
Uruguay (most of which were restructured as a subordinated negotiable
obligation) plus interest accrued. Operating expenses remained practically
unchanged in real terms.

Insurance--The Insurance segment showed a Ps.2.2 million net loss, mainly as a
result of a Ps.44.8 million net financial loss resulting from (i) the monetary
loss due to inflation on the company's investments and (ii) the establishment of
valuation reserves on these investments. Net income from services was negative,
including mainly acquisition charges. In addition, operating expenses increased
from 2001 levels. These losses and expenses were not compensated by a higher net
other income. This line includes premiums earned net of benefits, claims and
reinsurance costs. The increase in this line over the previous year reflects the
increase in premiums charged.

Other Grupo's Businesses--The Ps.8.4 million net loss showed by this segment was
the result of the weak operating performances of both Net Investments'
subsidiaries and Galicia Warrants, and of the recording of losses (under "Other
Income") for Net Investments' equity interest in Tradecom Intl.

The results of the segments pertaining to the break-down of the Bank's
operations, were as follows:

Buenos Aires Metropolitan Branches and Rest of the Country Branches--The two
segments showing the results of branches recorded similar behaviors. These
segments' net losses were the consequence of an extremely low net financial
income when compared to previous periods. These segments' net financial income
was affected by the significant decreases in deposit and loan volumes and by the
reduction in the interest-rate spread for the Bank as a whole. It should be
stressed that the branches' portfolios are mainly private-sector loan
portfolios, which were pesified at the Ps.1 per US dollar parity and most of
which were not eligible to be adjusted by the CER but by the

                                     -146-
<PAGE>

CVS. The latter adjustment was not applied by the Bank during 2002. In addition
these segments' results were affected by the deterioration of the quality of
their loan portfolios as a result of the unfavorable economic environment of
most of 2002, which led to an increase in their loan loss provisions. These
factors could not be offset by a positive net income from services and lower
administrative expenses.

Fee income decreased when compared with the prior fiscal year due to the fact
that (i) services prices did not follow the increase in the general level of
prices of 2002, especially the WPI, and therefore have fallen in real terms; and
(ii) fee income was affected by the overall fall in the Bank's activity level.

Administrative expenses fell significantly as a result of the cost reduction
plan implemented by the Bank in 2002, that involved the closing of branches and
the reduction in staffing levels. During 2002, 61 branches in Argentina were
closed, that is 21.1% of those existing as of December 31, 2001 and branches'
staff decreased by 1,106 employees, representing a 36.9% decrease from December
31, 2001 levels.

Home Office--This segment shows a net loss in 2002, mainly as a result of (i) a
monetary loss from financial intermediation for Ps.1,241.7 million; (ii) the
fact that this segment bears all of the charge for the establishment of the
unallocated provisions of the Bank, which charge was significant during 2002,
and (iii) the recording of net other losses for Ps.602.1 million, mainly
reflecting the provisions established by the Bank for contingencies related to
its interests in non-financial businesses and amortization of certain goodwill.

The Ps.1,947.2 million net financial income reflects the fact that the Home
Office segment concentrates the financial income attributable to all of the
public-sector assets held by the Bank, including secured loans and the
compensatory and the hedge bonds received or to be received by the Bank for the
effects of the "asymmetric pesification" on both Banco Galicia (and its foreign
branches) and on Banco Galicia Uruguay S.A. Compensation for the effects of the
"asymmetric pesification" on Galicia Uruguay's balance sheet was granted to the
Bank in Argentina and is therefore booked at the Home Office. It should be
stressed that public sector assets were pesified at the Ps.1.40 per US dollar
exchange rate and accrued the CER adjustment. In addition, the compensatory and
the hedge bonds are dollar denominated and, during 2002, the exchange rate
increased by approximately 240%, both factors explaining the Home Office's
relatively high financial income. Net financial income was positive despite the
fact that this segment results are net of the cost of the Home Office's foreign
debt (and the corresponding valuation difference in 2002) and that of the Bank's
liabilities with the Argentine Central Bank.

This segment's income from services, structurally lower than that of the
branches, was affected by the payment of extraordinary fees in connection with
structured-note transactions that were paid off by the Bank prior to maturity.

In addition, this segment's administrative expenses increased due to the fact
that they include all of the restructuring charges (Ps.130 million) associated
to the decrease in the Bank's overall staff in 2002.

Regional Credit Cards--The regional credit-card companies' results show a
Ps.333.4 million net loss.

On one hand, these compaies' results were affected by the decrease in their
level of activity caused by the recession, especially during the first half of
2002, and by the decrease of services prices in real terms. This is reflected in
the Ps.141.8 million income from services, that was 54.1% lower in real terms
than in 2001, being practically unchanged in nominal terms from the previous
year's figure.

On the other hand, these companies results show the effects of (i) their balance
sheet's adjustment for inflation (a monetary loss of Ps.259.6 million shown
under "Monetary Results of Other Income") and (ii) the devaluation of the peso
during 2002 and of the decrease in interest-rate spreads which accounts for the
Ps.17.1 million net financial loss. . The negative effect of the increase in the
exchange rate, is a result of these companies' consolidated short foreign
currency position, which in turn was caused by the fact that the "asymmetric
pesification" measures were not compensated by the government. Net financial
income was also affected by the pesification of loans to the private sector at
the 1 to 1 parity.

In addition, provisions for loan losses were higher than in previous years,
given that these companies' customer base, pertaining to the lower-income
segment of the population, was particularly affected by the 2002 recession that

                                     -147-
<PAGE>

caused high unemployment rates and the fall in real income. However, the
deterioration in asset quality slowed down by year end. The streamlining of
these companies' operations (which comprised a reduction in their distribution
network and staff) is reflected in the 55.3% decrease in real terms of their
consolidated operating expenses (2.3% in nominal terms).

International--This segment showed a Ps.1,833.1 million loss. This loss is
mainly attributable to to the Ps.1,508.5 million net financial loss mainly
reflecting the losses generated by the increase in the exchange rate during
2002, given that Galicia Uruguay was left, after the "asymmetric pesification"
measures, with a short foreign currency position, that was compensated by the
government but at Banco Galicia

In addition this segment's results were affected by high loan loss provisions
reflecting the deterioration of the quality of its assets, mainly loans granted
to Argentine private-sector customers, the repaying capacity of which was
affected by the unfavorable economic environment prevailing in Argentina during
most of 2002, including the devaluation of the peso.

Other Financial Businesses--This segment's net loss was mainly due to the
Ps.16.6 million monetary loss from financial intermediation, partially offset by
the profits generated by the Bank's investments in non-consolidated
financial-related companies such as Banelco and Visa, shown under "Other
Income". The remaining consolidated companies show a lower fee income, as
compared to the previous year's figure, as a result of lower levels of activity.

Other Equity Investments--This segment showed a Ps.50.7 million loss as a result
of a negative net other income. The "Other income" line shows the aggregate
losses generated by the Bank's interests in infrastructure and utility
companies, mainly Aguas Argentinas S.A., Aguas Cordobesas S.A. and Aguas
Provinciales de Santa Fe S.A. These companies were significantly affected by the
changes occurred in the Argentine economy in 2002, mainly the devaluation of the
currency, which increased the amount in pesos of these companies'
foreign-currency debts together with the government's policy of not allowing
utilities to increase prices in the inflationary environment prevailing in
Argentina during 2002, especially in the first half of the year.

RESULTS BY SEGMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

As reflected in the table in note 36 to our audited consolidated financial
statements, Grupo Galicia, considering only the holding structure, posted a
Ps.8.4 million net loss in fiscal year 2001 compared to the Ps.0.2 million
annualized net loss accounted in the six-month period ended in December 31,
2000. This performance can be mainly traced to higher operating expenses (Ps.7.4
million vs. Ps.4 million annualized) because the structure was fully operating
in 2001. In addition, there was a decrease in net financial income (Ps.1.2
million compared to Ps.5.6 million annualized). This line shows the interest
earned by the company through its liquidity management, which is basically
obtained from Banco Galicia's cash dividend distribution.

The Insurance segment, which shows Sudamericana Holding S.A.'s performance,
posted a net income of Ps.0.2 million based mainly on a net financial income of
Ps.0.3 million, operating expenses of Ps.20.3 million and other income of
Ps.20.3 million (which included Ps.12.0 million income from the sale of a small
Uruguayan subsidiary).

The Other Companies' segment involves Net Investment S.A.'s, the internet
incubator company, and Galicia Warrants' activities. These two businesses are
considerably smaller than the Bank and insurance businesses. The net loss of
Ps.2.1 million posted in fiscal year 2001 can be mainly explained by a net
financial and fee income of Ps.4.9 million and operating expenses of Ps.6.1
million. This weak performance can be traced to Net Investment S.A.'s loss in
the first half of the year. However, in the second six months of 2001, Net
Investment S.A. reached break even.

The following is the performance of Banco Galicia's segments:

The drop in Buenos Aires Metropolitan Branches' and Rest of the Country
Branches' results can be traced to a reduction in financial spreads mainly in
the last quarter under analysis. The net average financial margin for both
segment amounted to 5.85% in 2001 compared to the 6.15% achieved in 2000.

                                     -148-

<PAGE>

Fee income grew due to a 5.5% increase in deposit fees, partially generated by
the increase in the number of saving and current accounts opened at the
branches. In addition, foreign exchange fees' growth can be traced to the lack
of confidence in the domestic currency which grew in the second half of the
year. Finally, insurance fees rose 38% in the "Buenos Aires Metropolitan
Branches" and 28.7% in the "Rest of the Country Branches".

Operating expenses grew in Buenos Aires Metropolitan Branches due to the
incorporation of ABN AMRO Bank Argentina's branches (19 branches and 192
employees) in October 2001. This was partially compensated by a substantial
36.9% reduction in communication expenses. In the "Rest of the Country
Branches", communication expenses dropped 35.2% and the closing of four
branches. In both segments, there was a net increase of 93 employees compared to
last year although the new 192 people from ABN AMRO Bank. Finally, operating
expenses also rose due to an increase in the VAT tax and the implementation of
the financial transaction tax since April 2001.

Home Office's net income growth can be basically explained by the increase in
net financial income due to the Ps.286.4 million income from government
securities that collateralized repo transactions. Moreover, loan loss provisions
rose as a consequence of the long economic recession affecting the Bank's asset
quality. This resulted in an increase in the number of medium-large companies
entering into the Chapter 11 category and the non-assigned provision which also
affected the "Home Office".

Regional Credit Cards' loss can be explained by a decrease in financial spreads
during the last six months and an important increase in operating expenses.

The International segment showed an increase in net financial income generated
by a wider spread partially offset by a higher operating expenses due to an
increase in taxes. The other income line can be traced to an extraordinary
result from the sale of the 22.71% stake in Banco Barclays e Galicia. However,
since February 13, 2002, Banco Galicia Uruguay's operations are suspended and
Banco Galicia is currently concentrating on winding down its foreign-based
units.

Results from the "Other Financial Business" segment can be principally related
to the fee income generated by Capital Markets S.A. and Galicia Factoring and
Leasing S.A. These both companies showed a good performance although the
negative economic conditions. For instance, Capital Markets S.A. completed
transaction with fifty clients and fulfilled the annual income budget.
Meanwhile, Galicia Factoring and Leasing S.A. reached Ps.740.3 million revenues
for its factoring product while the leasing product suffered a 8.92% decrease in
its revenues.

The other income line in "Other Equity Investment" segment was mainly generated
by a loss in Correo Argentino, where Banco Galicia held an 11.77% stake and the
result obtained by the divestiture of Inversora en Distribucion de Entre Rios
S.A.

RESULTS BY SEGMENTS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000

As reflected in the table in note 36 to our audited consolidated financial
statements, during the six-month period ended December 31, 2000, the net income
of the consolidated Bank represented 107% of the Group's total net income. This
reflected the fact that (1) minority interests in the Bank are deducted from the
total at the holding company level, (2) the businesses in which the Group has
recently invested are still experiencing losses and are considerably smaller
than the Bank and (3) The holding company expenses and specific income are not
material.

Grupo Galicia's consolidated information for the six-month period ended December
31, 2000, cannot be compared with the same period of the prior fiscal year. In
the following discussion of the Group's results by segments during the six-month
period ended December 31, 2000, comparisons with the year ended June 30, 2000,
have been made based on such six-month period results annualized.

In the six-month period ended December 31, 2000, the net income of the "Buenos
Aires Metropolitan Branches" and "Rest of the Country Branches" segments were
affected by the persistence of the recessionary environment. This situation had
a relatively stronger impact on small- and medium-sized companies and
individuals, which represent the bulk of these two segments' customer base. The
recessionary environment impacted these segments' operating income mainly
through higher loan loss provisions and a lower net income from services. Income
from services decreased due

                                     -149-

<PAGE>

to lower fees from credit cards, which were not offset by slightly higher fees
from deposit accounts. As a consequence, these two segments represented a lower
share of the Bank's total net income than in the year ended June 30, 2000.

The "Regional Credit Cards" segment showed an increase in operating income as a
result of higher net income from services, reflecting an increase in volume, and
lower loan loss provisions, given that loan loss provisions for the year ended
June 30, 2000, included non-recurring charges. The higher operating income was
compensated by higher administrative expenses tied to an increase in the number
of employees and offices that reflects the expansion of the regional credit card
operation.

The "Home Office" segment showed an increase in net income, mainly as a
consequence of an increase in the average volume of its loan portfolio (which
excludes the portfolio of loans to the non-financial public sector securitized
through the creation of the Galtrust1 trust), mainly due to the increase in the
Bank's lending to the non-financial public sector. The increase in the yield of
the Bank's government securities portfolio and lower loan loss provisions (as
compared to those for the year ended June 30, 2000, which included non-recurring
charges) contributed to the increase in this segment's net income.

The "International" segment showed a positive performance and maintained a
similar share of the Bank's net income as compared with the year ended June 30,
2000. The increase in this segment's net income was mainly due to lower losses
from the Bank's interest in Banco Barclays e Galicia S.A. Such losses amounted
to Ps.26.9 million in the year ended June 30, 2000, and to Ps.7.4 million in the
six months ended December 31, 2000.

The "Other Financial Businesses" segment showed a lower net income, mainly as a
consequence of lower profits from the Bank's interest in Banelco S.A. Such
profits amounted to Ps.7.9 million in the year ended June 30, 2000, and to Ps.2
million in the six-month period ended December 31, 2000.

The loss showed by the "Other Equity Investments" segment was due to the Ps.14.4
million loss derived from the Bank's interest in Correo Argentino S.A.,
partially offset by the Ps.6.3 million profits obtained from the sale of the
Bank's interest in Inverdersa.

TOTAL EXPOSURE TO THE ARGENTINE PUBLIC SECTOR

The following table shows the total exposure of the Group to the Argentine
public sector, both national and provincial. This exposure mainly conisists of
exposure of the Bank.

<TABLE>
<CAPTION>
                                                                 AS OF DECEMBER 31, 2002
----------------------------------------------------------------------------------------
                                      (in millions of December 31, 2002, constant pesos)
<S>                                                              <C>
NET POSITION IN GOVERNMENT SECURITIES.........................   Ps.             1,810.3
    Trading and Investment Accounts...........................                   1,017.4
    Fiscal Credit Certificate ................................                     105.4

    9% Bond maturing 2002.....................................                         -
    Compensatory bond.........................................                     687.5
OTHER RECEIVABLES RESULTING FROM FINANCIAL BROKERAGE..........                   8,429.3
    Compensatory bond.........................................                   2,814.2
    Hedge bond................................................                   4,223.0
    Galtrust I Financial Trust................................                     680.2
    Special Funds Former Almafuerte and Mendoza Banks.........                     242.0
    Secured Loans Trust.......................................                      27.0
    Compensation to be Received Related to the Payment
      of Deposits.............................................                     442.9
LOANS.........................................................                   7,756.9
    Provinces- Financial Sector ..............................                     133.3
    Secured Loans.............................................                   7,623.6
MISCELLANEOUS RECEIVABLES.....................................                     125.0
    Secured Loans Granted as Guarantee of the FFAEFyS Loan....                     125.0
                                                                 -----------------------
TOTAL.........................................................   Ps.            18,121.5
========================================================================================
</TABLE>

                                     -150-

<PAGE>

The Group's total exposure to the Argentine public sector as of December 31,
2002 amounted to Ps.18,121.5 million, representing 76.5% of its total assets.

For more information see "Description of Consolidated Assets" below.

DESCRIPTION OF CONSOLIDATED ASSETS

The structure and main components of the Group's consolidated assets as of
December 31, 2002 were as follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31, 2002
----------------------------------------------------------------------------------------------------------
                                                        (In millions of December 31, 2002, constant pesos)
<S>                                                                     <C>
Cash and Due from Banks.............................                    Ps.         571.9
Government and Corporate Securities.................                              1,814.0
Loans to the Non-Financial Public Sector............                              7,623.6
Other Loans, Net....................................                              2,966.2
Compensatory and hedge bonds to be received.........                              7,037.2
Other Assets........................................                              3,685.0
                                                        --------------------------------------------------
TOTAL...............................................                    Ps.      23,697.9
==========================================================================================================
</TABLE>

Total consolidated assets of the Group as of December 31,2002 amounted to
Ps.23,697.9 million. Of this total, 99.38%, or Ps.23,550.0 million, pertained to
the consolidated Banco Galicia, and 0.62% pertained to Sudamericana Holding
S.A., Galicia Warrants S.A. and Net Investment S.A.

The percentage of each asset component does not differ substantially from that
of the Bank's asset structure. The Bank has changed with respect to prior
fiscal years primarily with respect to the share of government securities and
loans.

The item "Cash and Due from Banks" mainly included cash for Ps.248.1 million,
and balances of Ps.256.7 million held at the Argentine Central Bank. The cash
and the balances held at the Argentine Central Bank were assets computable for
meeting the Minimum Cash Requirements. The Minimum Cash Requirements as well as
the "Minimum Placement Requirements" corresponded to requirements set forth by
the Argentine Central Bank and are explained in the "Liquidity" section.

As of December 31, 2002, the item "Government and Corporate Securities" amounted
to Ps.1,814.0 million. Such total amount mainly included Argentine Republic
External Notes for Ps.971 million, Fiscal Credit Certificates for Ps.105.4
million, and Boden 2012 for Ps.687.5 million.

Through Communiques "A"3805 and "A"3825, the Argentine Central Bank ruled the
modifications set forth by Decree No.2167/02 for the methodology to calculate
this compensation. This regulation established that financial institutions had
to inform the Argentine Central Bank the compensation amount no later than
December 23, 2002. Banco Galicia submitted its calculation on the compensatory
and the hedge bonds, which amounted in aggregate to US$2,254 million (US$1,022
million as compensatory bond and US$1,232 million as hedge bond) of which US$891
corresponded to the aggregate compensation attributable to Galicia Uruguay
(US$230 million as compensatory bond and US$1,232 million as hedge bond).

As of December 31, 2002 the total compensation amount included in the Group's
balance sheet was Ps.7,724.7 million, of which Ps.2,248.7 million corresponded
to Galicia Uruguay. Of this total, as of December 31, 2002, amounts effectively
received were recorded as government securities. The existing difference,
totaling Ps.7,037.2 million, was recognized under the caption "Other Receivables
for Financial Brokerage in Foreign Currency - Compensation to be Received from
the Argentine government" as a right to receive Boden, when the review process
by the Argentine Central Bank is completed. If the compensatory and the hedge
bonds not received at the date of the preparation of this annual report were
recognized within the caption "Government Securities", the percentage that this
item would represent of the total assets of the Group would be 37.3%. See "Item
3. Key Information--Risk Factors--The Bank has recorded its Boden and its rights
to receive or acquire future Boden as assets having a value equal to the face
amount of the Boden received or to be received and acquired."

                                     -151-

<PAGE>

The following table shows the Group's holdings of government securities as of
December 31, 2002.

<TABLE>
<CAPTION>
                                                                          AS OF DECEMBER 31, 2002
--------------------------------------------------------------------------------------------------------------
                                                             (in millions of December 31, 2002, constant pesos)
<S>                                                                                                <C>
GOVERNMENT SECURITIES
Pesos
     Fiscal Credit Certificate...............................................................      Ps.   105.4
     Other...................................................................................             36.3
Dollars
     Argentine Republic External Notes.......................................................            971.0
     Compensatory bond.......................................................................            687.5
     Other...................................................................................             10.9
TOTAL GOVERNMENT SECURITIES..................................................................          1,811.1
LISTED CORPORATE DEBT SECURITIES.............................................................              2.9
MUTUAL FUNDS.................................................................................                -
                                                                                                   -----------
TOTAL GOVERNMENT AND CORPORATE SECURITIES....................................................      Ps. 1,814.0
==============================================================================================================
</TABLE>

The following table provides a break downn, by maturity date, of the Group's
holdings in government and listed corporate securities as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                            AS OF DECEMBER 31, 2002
                                                  --------------------------------------------------------------------------
                                                                WITHIN     AFTER ONE YEAR       AFTER 5 YEARS BUT     AFTER
                                                   HOLDING     ONE YEAR   BUT WITHIN 5 YEARS     WITHIN 10 YEARS    10 YEARS
----------------------------------------------------------------------------------------------------------------------------
                                                              (in millions of December 31, 2002, constant pesos)
<S>                                              <C>          <C>         <C>                   <C>                 <C>
Government Securities
Pesos
     Fiscal Credit Certificate...............    Ps.   105.4  Ps.  52.7   Ps.           52.7                    -       -
     Other...................................           36.3       34.9                  1.4                    -       -
Dollars
     Argentine Republic External Notes.......          971.0      582.6                388.4                    -       -
     Compensatory bond.......................          687.5          -                257.8    Ps.         429.7       -
     Other...................................           10.9        1.4                  4.0                  5.5       -
TOTAL GOVERNMENT SECURITIES..................        1,811.1      671.6                704.3                435.2       -
     Listed Corporate Debt Securities........            2.9        0.6                  2.3                    -       -
     Mutual Funds............................              -          -                    -                    -       -

TOTAL GOVERNMENT AND CORPORATE SECURITIES....    Ps. 1,814.0  Ps. 672.2   Ps.          706.6    Ps.         435.2       -
============================================================================================================================
</TABLE>

The Boden 2012 is current while the Argentine Republic External Notes are in
payment default. The past due amounts of these notes can be aplied to the
payment of taxes. The Fiscal Credit Certificates can be applied to the payment
of taxes as well.

As of December 31, 2002, net loans amounted to Ps.10,589.8 million, representing
44.7% of total assets. Loans continued being the Bank's most important asset.

Decree No.1387/01 dated November 1, 2001 offered the possibility to voluntarily
swap the debt instruments from the national and provincial governments for
"secured loans" (unlisted debt instruments issued by the national government and
secured by tax collection). The Group decided to swap all of its eligible
portfolio of government securities and loans made to the national and provincial
public sectors in exchange for secured loans. As of December 31, 2002, the
balance of secured loans resulting from that part of the swap that was actually
completed amounted to Ps.6,858.5 million (principal amount plus interests,
included in the item Loans to the Non-Financial Public Sector), this amount
included Ps.54.9 million corresponding to Sudamericana Holding S.A. The
remaining of the loans made to the non-financial public sector comprises
Ps.765.1 million (Ps.544.4 million in principal plus Ps.220.7 million in
adjustments) corresponding to assistance granted to the Fiduciary Fund for
Provincial Development, which allocated these funds for loans to provincial
governments. This portfolio was not included in the portfolio eligible to be
tendered in the November 2001 debt swap. However, Decree No.1579/01 of August,
28,

                                     -152-

<PAGE>

2002, established a new restructuring of secured loans representing in origin an
exposure to the provinces for new secured loans or Bonds, issued by the FFDP,
with a longer maturity (16 years), principal adjusted by the CER and a lower
interest rate. This Decree included the loans granted to the FFDP. Such swap is
currently pending completion.

Once the Argentine currency devaluation was effective in January 2002, Decree
No.471/02 enacted on March 13, 2002, established that those obligations
denominated in US dollars of the national, provincial and municipal public
sectors outstanding as of February 3, 2002 would be converted into pesos at the
exchange rate of Ps.1.40 per US dollar and would be adjusted by the CER.
Moreover, said Decree established that the national public sector's obligations
would bear a fixed annual interest rate ranging from 3% to 5.5% depending on
their average life. Furthermore, Decree No.1,579/02 enacted on August 28, 2002
set for the provincial public-sector debt a fixed annual interest rate of 2%.

Secured loans corresponding in origin to an exposure to the national public
sector are current. The secured loans corresponding in origin to an exposure to
the provinces are in the process of being swapped.

The category "Other Loans" recognizes Ps.133.6 million of loans granted to the
financial public sector, not included in the swap for secured loans. The
remaining amount corresponds to loans to the non-financial private sector. The
lower amount recorded in the category "Other Loans" within the Group's total
assets, compared to the previous fiscal year, is related to the pesification of
the loans to the private sector at the Ps.1 per US dollar parity and to the
exceptions provided for by the regulations in connection with the applicability
of the adjustment by the CER. This item also reflects payments done by debtors,
who chose to use their restructured deposits held at the Bank to pay off such
loans. Similarly, this category's lower participation in total assets was also
the consequence of the securitization or sale of part of the Bank's loan
portfolio in order to restore the Bank's liquidity within the framework of the
Plan See "Item 4. Information on the Company--Selected Statistical
Information--Loan Portfolio."

The most significant amounts in the category "Other Assets" mainly correspond to
bank premises and equipment, miscellaneous assets and intangible assets for
Ps.1,067.9 million and to the following assets:

(i)      the Bank's holdings of debt securities and subordinated notes issued by
         the Galtrust I Financial Trust for Ps.680.2 million, as a result of the
         securitization of part of the Bank's loan portfolio to the provincial
         public sector in late 2000, recorded under "Other Receivables Resulting
         from Financial Intermediation"; See "--Off-Balance Sheet
         Arrangements--Off-Balance Sheet Funding."

(ii)     Ps.442.9 million (recorded under "Other Receivables Resulting from
         Financial Intermediation") for the recording of a right arising from
         the difference between the amount paid by the Bank pursuant to judicial
         orders (obtained by depositors having filed suits against the Bank to
         recover their deposits under the consideration that the rules issued by
         the Government regarding the restructuring of deposits violated
         constitutional rights) and the amount resulting from the conversion
         into pesos of the dollar balance of the deposits reimbursed at the
         Ps.1.40 per US dollar exchange rate (adjusted by CER and interest
         accrued until the date of the reimbursement). Through Communique
         "A"3916, the Argentine Central Bank admitted the recording of an asset
         for the difference mentioned in the paragraph above, establishing also
         that the corresponding amount had to be recorded as an intangible
         assets and amortized in 60 installments, equal and consecutive
         beginning April 2003. The Bank has retained its rights to make claims
         at suitable times for the negative effect on its financial condition
         caused by the reimbursement of deposits in dollars or in pesos for the
         equivalent amount at the market exchange rate, mandated by court orders
         or final judgements, not included in the determination of the
         compensation to financial institutions.

(iii)    Ps.242 million (recorded under "Other Receivables Resulting from
         Financial Intermediation") of the Bank's interest in the funds jointly
         formed by the Bank with other private-sector banks in order to
         facilitate the recovery of the assets of former banks Almafuerte and
         Mendoza ("Special Funds former Almafuerte and Mendoza Banks"), in which
         restructuring Banco Galicia took part in past years. These funds were
         constituted with national-government securities subsequently swapped
         for secured loans.

                                     -153-

<PAGE>

(iv)     Ps.125 million (recorded under "Miscellaneous Receivables") of secured
         loans granted as collateral of the loan received from the Fiduciary
         Fund for the Assistance to Financial Institutions and Insurance
         Companies as part of the implementation of the Plan.

(v)      Ps.103.3 million of equity investments in non-consolidated companies,
         mainly representing investments in public services companies.

(vi)     Ps.89.6 million (recorded under "Other Receivables from Financial
         Intermediation") of the Bank's holdings of subordinated notes issued by
         the "Galicia Mortgage Loans Financial Trust" as part of the
         implementation of the Plan." See "--Off-Balance Sheet
         Arrangements--Off-Balance Sheet Funding."

(vii)    Ps.81.4 million (recorded under "Other Receivables from Financial
         Intermediation") of the Group's holdings of debt securities and
         subordinated notes issued by the Galtrust II and V financial trusts
         created in 2001 as a result of the securitization of part of the Bank's
         portfolio of mortgage loans in late 2001. See "--Off-Balance Sheet
         Arrangements--Off-Balance Sheet Funding."

(viii)   Ps.27 million (recorded under "Other Receivables from Financial
         Intermediation") of the Bank's holdings of subordinated notes issued by
         the "Secured Loans Trust" as part of the implementation of the Plan."
         See "--Off-Balance Sheet Arrangements--Off-Balance Sheet Funding."

OFF-BALANCE SHEET ARRANGEMENTS

The Group's off-balance sheet risk mainly arises from the Bank's activities.

In the normal course of its business, the Bank was a party to financial
instruments with off-balance sheet risk, in order to meet the financing needs of
its customers. These instruments expose the Bank to credit risk, in addition to
amounts recognized in the consolidated balance sheets. These financial
instruments include commitments to extend credit, standby letters of credit,
guarantees granted and acceptances.

In addition, in the normal course of its business, the Bank has used the
securitization of assets as a source of funding. In addition, in 2002, within
the framework of the Plan, the Bank has securitized mortgage loans and secured
loans , as part of a series of measures contemplated by the Plan in order for
the Bank to restore its liquidity affected by the deposit run of late 2001 and
the first months of 2002.

COMMITMENTS TO EXTEND CREDIT, STAND-BY LETTERS OF CREDIT AND GUARANTEES GRANTED

Guarantees granted are surety guarantees in connection with transactions between
two parties. Standby letters of credit and guarantees granted are conditional
commitments issued by the Bank to guarantee the performance of a customer to a
third party. Acceptances are conditional commitments for foreign trade
transactions.

Commitments to extend credit are agreements to lend to a customer at a future
date, subject to the meeting of the contractual terms. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since many of the commitments are expected to expire without being
drawn upon, total commitment amounts do not necessarily represent actual future
cash requirements of the Bank. The Bank evaluates each customer's
creditworthiness on a case-by-case basis.

The Bank uses the same credit policies in making commitments, conditional
obligations and guarantees as it does for granting loans. In the opinion of
Management, the Bank's outstanding commitments and guarantees do not represent
unusual credit risk.

The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument, for commitments to extend credit, standby
letters of credit, guarantees granted and acceptances is represented by the
contractual notional amount of those investments.

A summary of the Bank's credit exposure related to these items is shown below:

                                     -154-

<PAGE>

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                      ------------------------------------------------
                                                               2002                    2001
                                                      ------------------------------------------------
                                                     (In millions of December 31, 2002, constant pesos)
<S>                                                         <C>                     <C>
Commitments to Extend Credit...................             Ps. 169.6               Ps. 554.3
Standby Letters of Credit......................                  48.6                    54.3
Guarantees Granted.............................                 268.6                   744.5
Acceptances....................................                 104.8                   153.3
------------------------------------------------------------------------------------------------------
</TABLE>

In addition to the above commitments, at December 31, 2002 and 2001 the
available purchase limits for credit-card holders amounted to Ps.1,093.8 million
and Ps.5,406.9 million, respectively.

The credit risk involved in issuing letters of credit and granting guarantees is
essentially the same as that involved in extending loan facilities to customers.
In order to grant guarantees to its customers, the Bank may require counter
guarantees. These financial customer guarantees are classified, by type, as
follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                      ------------------------------------------------
                                                               2002                    2001
                                                      ------------------------------------------------
                                                     (In millions of December 31, 2002, constant pesos)
<S>                                                         <C>                     <C>
Preferred Counter Guarantees...................             Ps. 151.3               Ps. 268.7
Other Counter Guarantees.......................                  43.7                    63.9
------------------------------------------------------------------------------------------------------
</TABLE>

See note 28 to the audited consolidated financial statements.

OTHER COMMITMENTS

The Bank has granted a senior pledge on all its shares in Correo Argentino S.A.,
in favor of the International Finance Corporation, the Inter American
Development Bank and a syndicate of local institutions, as collateral for
financing granted to that company. The Argentine Central Bank through Resolution
No.408 dated September 9, 1999 authorized this transaction. According to the
contract signed, in the event of a deficit in funds, the Bank and the majority
shareholder of Correo Argentino S.A. should hold the financial creditors
harmless from any non-compliance as a result of such deficit. Under the terms of
the contract, Correo Argentino S.A. should inform the Bank and Socma Americana
S.A. of the existence of any deficit. As of the date of this annual report, the
Bank had not been notified of any requirement in this connection.

As a shareholder of the concessionaires of the water supply services, Aguas
Argentinas S.A., Aguas Provinciales de Santa Fe S.A. and Aguas Cordobesas S.A.,
Banco Galicia and the other shareholders have committed to provide financial
support to those companies if they were unable to fulfill the commitments they
have undertaken with international financial bodies.

The Inter American Development Bank requested that the shareholders of Aguas
Argentinas S.A. and Aguas Provinciales de Santa Fe S.A. grant loans to those
companies. After December 31, 2002, assistance was granted to Aguas Argentinas
S.A. in the amount of US$0.6 million, while the obligation to provide assistance
to Aguas Provinciales de Santa Fe S.A. is not deemed to exist.

The Bank has established a Ps.92 million provision for these contingencies.

See note 3 to the audited consolidated financial statements.

OTHER

The Bank accounts for checks drawn on it and other banks, as well as other items
in process of collection, such as notes, bills and miscellaneous items, in
memorandum accounts until such time as the related item clears or is accepted.
In management's opinion, the risk of loss on these clearing transactions is not
significant. The amounts of clearing items in process were as follows:

                                     -155-

<PAGE>

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                      ------------------------------------------------
                                                               2002                     2001
                                                      ------------------------------------------------
                                                     (In millions of December 31, 2002, constant pesos)
<S>                                                         <C>                     <C>
Checks drawn on the Bank.......................             Ps.  77.8               Ps.   844.7
Checks drawn on the other Bank.................                 127.2                   1,048.3
Bills and other items for collection...........                 271.6                     654.4
------------------------------------------------------------------------------------------------------
</TABLE>

As regards the fiduciary risk, during the fiscal year 2000, the Bank was
appointed as trustee under four trust agreements to guarantee compliance with
the obligations arising from different contracts between the parties. At
December 31, 2002 and 2001 the trust funds amounted to Ps.76.5 million and
Ps.55.2 million, respectively.

In addition, the Bank has securities in custody, mainly related to its activity
as mutual fund depositary institution. At December 31, 2002 and 2001, these
securities amounted to Ps.6,422.1 million and Ps.4,267.3 million, respectively.

See note 28 to the audited consolidated financial statements.

OFF-BALANCE SHEET FUNDING

The securitization of assets basically involves a company selling assets to a
trust and the trust funding the purchase by issuing securities that are sold to
third parties. A trust is a special-purpose-entity not an operating entity;
typically, a trust is set up for the single purpose of completing the
securitization transaction, has a limited life and no employees.

         -        Setting up of the "Galtrust I" Individual Financial Trust

On October 20, 2000 the Bank securitized a group of loans that were granted to
the Argentine Provinces. These loans were collateralized by taxation revenues
shared by the national government and the provinces. In 2001 these loans were
tendered to the exchange of public-sector debt for secured loans. The Bank
transferred the ownership of the loans to the Galtrust I Financial Trust (the
"Trust"). In turn, the trust issued Class A Debt Securities with a face value of
Ps.100 million, Class B Debt Securities with a face value of Ps.200 million and
Participation Certificates (subordinated notes) with a face value of Ps.200
million. Ps.46.9 million (in historical currency) of the Class B Debt Securities
were sold to third party investors and the remainder of the certificates was
retained by the Bank.

The Bank transferred to the trust ownership of loans amounting Ps.1,070.9
million granted to Argentine provinces (currently secured loans) and reserve
investments for Ps.17 million, in exchange for cash, and retained interest in
the trust in the form of Class A Debt Securities and Class B Debt Securities and
Participation Certificates (subordinated notes). As of December 31, 2002, those
securities were held in the Bank's portfolio for Ps.680.2 million.

         -        Setting up of the " Galtrust II, III, IV and V " Individual
                  Financial Trusts

At the meeting held on December 6, 2001, the Board of Directors of Banco Galicia
approved the creation of a Program for the securitization of loans and the
issuance of debt securities and/or certificates of participation by Galtrust
Financial Trusts. The Program was approved by the CNV on April 6, 2000, for a
face value of up to US$1,000 million and authorized the Bank's participation as
originator, trustor and manager of that program.

Four financial trusts, "Galtrust II, III, IV and V - Letras Hipotecarias", were
set up under the above-mentioned program and Certificates of Participation and
Debt Securities were issued under those trusts. On December 2001, the Bank
transferred the trust ownership of mortgage loans amounting to Ps.521.3 million
to the "Galtrust II, III, IV and V - Letras Hipotecarias" financial trusts.

The Bank retained Certificates of Participation for a face value of Ps.136.8
million, in which it had a 100% interest and the remaining Class A and Class B
Debt Securities were subscribed for by the Bank and Hartford Seguros de Vida
S.A.

                                      -156-
<PAGE>

As of December 26, 2002 the Galtrust III and IV financial trusts were
terminated. As of December 31, 2002 and 2001, the Bank held Certificates of
Participation and Debt Securities of the Galtrust II and V Financial Trusts for
Ps.81.4 million.

         -        Trusts set up as part of the Plan

As part of the implementation of the Plan, during May 2002, the "Galicia
Mortgage Loans Financial Trust" was created. Mortgage loans for Ps.312.8 million
(in May 2002 currency) were transferred to the trust and the Bank received in
exchange Ps.234.6 million (in May 2002 currency) in cash and certificates of
participation for Ps.78.2 million (in May 2002 currency). The trustee is ABN
AMRO Bank Argentine Branch. Thirteen domestic financial institutions subscribed
the trust's debt securities. The Bank has the obligation to replace the loans in
the trust's assets, under certain conditions. As of December 31, 2002, the
amount of the participation certificate was Ps.89.6 million.

Also as part of the implementation of the Plan, the "Secured Loans Trust" was
created. The parties to it are Banco de la Provincia de Buenos Aires as
beneficiary and BAPRO Mandatos y Negocios S.A., as trustee. Secured loans for
Ps.108 million (in May 2002 currency) were transferred to the tust and Ps.81
million in cash and certificates of participation for Ps.27 million were
received in exchange (in May 2002 currency). As of December 31, 2002, the amount
of the participation certificate was Ps.27 million.

See note 39 to the audited consolidated financial statements.

DESCRIPTION OF CONSOLIDATED LIABILITIES

As of December 31, 2002, the structure and main components of the Grupo
Galicia's consolidated liabilities were as follows:

<TABLE>
<CAPTION>
                                                                                      AS OF DECEMBER 31, 2002
-------------------------------------------------------------------------------------------------------------------------
                                                                       (In millions of December 31, 2002, constant pesos)
<S>                                                                     <C>
Deposits..............................................................                     Ps. 5,164.3
Argentine Central Bank- Financial Assistance for Liquidity Support....                         5,581.5
Others Banks and International Entities...............................                         3,157.6
Negotiable Obligations................................................                         3,434.6
Advance from the Argentine Central Bank-hedge bond....................                         2,468.4
Other Liabilities.....................................................                         2,267.0
Shareholders' Equity..................................................                         1,624.5
                                                                       ---------------------------------------------------
TOTAL.................................................................                    Ps. 23,697.9
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

Of the Group's Ps.22,073.4 million liabilities (excluding shareholders' equity),
99.72% pertained to the Bank (Ps.22,011.7 million) and 0.28% to Sudamericana
Holding S.A, Net Investment S.A. and Galicia Warrants S.A. As with assets, the
structure of the Group's liabilities does not differ substantially from that
of the Bank. The composition of the Bank's liabilities has suffered significant
modifications in comparison with previous years, as a consequence of the
liquidity crisis faced by the financial system, in general, at the end of 2001
and during the first half of 2002, and of the economic policy's measures that
were taken to address such crisis.

As of December 31, 2002, the Group's deposits, generated by the Bank's activity,
amounted to Ps.5,164.3 million, which represented 21.8% of total funds,
including shareholder's equity, compared with 48.4% recorded at the close of the
previous fiscal year. As of December 31, 2002, Grupo Galicia and Sudamericana
Holding S.A. (consolidated) held deposits at the Bank in the amount of Ps. 25.7
million.

The decline in deposits' participation in total funds reflects the runs on
deposits that occurred during late 2001 and in the first months of 2002; the
payment by the Bank of court orders (or, amparos) mandating the reimbursement of
deposits; and the completion of the Canje I. In addition, dollar-denominated
deposits were pesified at the Ps.1.40 per

                                     -157-

<PAGE>

US$1 parity plus the adjustment by the CER, while negotiable obligations and
other debts with banks and international credit agencies remained in foreign
currency and valued at the free exchange rate. In addition, of the US$1,355.6
million dollar-denominated deposits in Galicia Uruguay as of December 31, 2001,
approximately US$1,176 million were restructured, with the difference mainly
representing the deposit loss suffered by Galicia Uruguay in 2002 before the
suspension of its activities. As of December 31, 2002, Galicia Uruguay
consolidated deposits amounted to US$550 million (Ps.1,849.9 million), of which
US$424.2 million (Ps. 1,426.5 million) represented deposits restructured as
dollar-denominated time deposits. Deposits restructured as negotiable
obligations amounted as of December 31, 2002, to US$462.6 million (Ps.1,555.8
million).

In addition, the expiration date of the Canje I was on July 16, 2002. This
exchange, which represented Ps.693 million of the Bank's deposits (excluding the
CER adjustment and interests), was completed on December 31, 2002, thus, as of
such date, the above-mentioned amount was not part of the Bank's total deposits.

At the close of the fiscal year, the Canje II was still in progress. After
several extensions, the expiration date for this exchange offer was set to be on
May 23, 2003. Therefore, at the close of fiscal year 2002, the amount of
restructured deposits included in the Bank's total deposits amounted to Ps.940.2
(excluding the CER adjustment and interests). This amount included Ps.73.1
million (excluding the CER adjustment and interests) of deposits, whose holders
had chosen to receive bonds instead, given that the Canje II was still in
progress.

The Argentine Supreme Court could rule favorably to restructured deposit
redollarization. See "Item 3. Key Information--Risk Factors--An increasing
number of judgments against financial institutions, in connection with the
"corralon", and the recent decision of the government to lift the "corralon" may
result in further deterioration of the deposit base." In such case, the Bank
would be subject to an increase in the legal actions requesting the
reimbursement of restructured deposits in dollars or in pesos for an amount
equivalent to the original amount in dollars of restructured deposits at the
market exchange rate.

The following table provides a breakdown of the Bank's deposits as of December
31, 2002, by contractual maturity date and currency of denomination. As already
mentioned in this annual report, the contractual maturity of CEDROs was set by
the Argentine government's regulations.

<TABLE>
<CAPTION>
                                                      PESO- DENOMINATED    DOLLAR- DENOMINATED          TOTAL
                                                      ---------------------------------------------------------------
                                                                   % OF                 % OF                    % OF
                                                       AMOUNT     TOTAL      AMOUNT     TOTAL        AMOUNT     TOTAL
---------------------------------------------------------------------------------------------------------------------
                                                             (In millions of December 31, 2002, constant pesos)
<S>                                                   <C>         <C>      <C>          <C>       <C>           <C>
CURRENT ACCOUNTS AND DEMAND DEPOSITS................  Ps.  679.5    24.7%  Ps.   44.5       2.2%  Ps.  724.0     15.1%
SAVINGS ACCOUNTS....................................       334.5    12.2        224.5      11.0        559.0     11.7
TIME DEPOSITS.......................................       733.0    26.7      1,669.2      81.7      2,402.2     69.8
     Maturing within 29 Days........................       341.5    12.4        156.4       7.6        497.9     10.4
     Maturing after 30 Days but within 89 Days......       349.0    12.7         41.9       2.1        390.9      8.2
     Maturing after 90 Days but within 179 Days.....        35.7     1.3         22.8       1.1         58.5      1.2
     Maturing after 180 Days........................         6.8     0.3      1,448.1      70.9      1,454.9     30.4
     Cedros.........................................       940.2    34.2            -         -        940.2     19.6
OTHER DEPOSITS (*)..................................        59.3     2.2        105.6       5.1        164.9      3.4
     Maturing within 29 Days........................        58.9     2.2        105.6       5.1        164.5      3.4
     Maturing after 30 Days but within 89 Days......           -       -            -         -            -        -
     Maturing after 90 Days but within 179 Days.....           -       -            -         -            -        -
     Maturing after 180 Days........................         0.4       -            -         -          0.4        -
                                                      ---------------------------------------------------------------
TOTAL DEPOSITS (1)..................................  Ps.2,746.5   100.0%  Ps.2,043.8     100.0%  Ps.4,790.3    100.0%
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Only principal.

The preceding table shows that the highest concentration of time deposits
denominated in pesos, excluding restructured deposits, is in the "up-to-30 days"
and "after 30 days but within 89 days" categories. Until March 2002, the minimum
term effective for free time-deposit taking was 30 days. From that moment
onwards, the Argentine Central Bank authorized the raising of free time deposits
up to a term of 7 days, to the extent that they were set up in

                                     -158-

<PAGE>

cash or by means of transfers made from abroad; and up to a term of 14 days if
they were set up with funds from the "corralito" accounts.

Dollar-denominated deposits represented 42.7% of total deposits. Of these, 91.3%
were deposits in the Bank's foreign branches and subsidiaries: Ps.11.2 million
(US$3.3 million) were deposits in the Bank's Cayman Branch; Ps.5.0 million
(US$1.5 million) deposits in the Bank's New York Branch, and Ps.1,849.9 million
(US$549.9 million) deposits in Galicia Uruguay (consolidated). Of the latter,
Ps.1,426.5 million (US$424.2 million) corresponded to the restructured deposits
of Galicia Uruguay and Ps.259.6 million (US$77.2 million) to deposits of Banco
de Galicia Cayman Ltd., currently under a restructuring process. In addition
Galicia Uruguay had US$34 million in demand deposits. This amount corresponds to
the 3% initial payment to be made beginning January 2003.

The following table provides information about the maturity of the Group's
outstanding time deposits exceeding Ps. 100.000, according to whether they were
opened at domestic or foreign branches as of December 31, 2002.

<TABLE>
<CAPTION>
                                                                                        ISSUED BY             ISSUED BY
                                                                                     DOMESTIC OFFICES      FOREIGN OFFICES
--------------------------------------------------------------------------------------------------------------------------------
                                                                               (In millions of December 31, 2002, constant pesos)
<S>                                                                            <C>                         <C>
Time Deposits
    Within 29 Days...........................................................            Ps.  63.3         Ps.   125.6
    After 30 Days but within 89 Days.........................................                193.0                   -
    After 90 Days but within 179 Days........................................                 17.6                   -
    After 180 Days...........................................................                 14.7             1,345.7
                                                                                -----------------------------------------------
TOTAL TIME DEPOSITS..........................................................                288.6             1,471.3
CEDROS.......................................................................                152.9                 0.0
Other Deposits (1)
    Within 29 Days...........................................................                    -                57.1
    After 30 Days but within 89 Days.........................................                    -                   -
    After 90 Days but within 179 Days........................................                    -                   -
    After 180 Days...........................................................                    -                   -
                                                                                -----------------------------------------------
TOTAL OTHER DEPOSITS.........................................................                    -                57.1
                                                                                -----------------------------------------------
TOTAL DEPOSITS...............................................................            Ps. 441.5         Ps. 1,528.4
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Only principal.

As a consequence of the liquidity crisis which affected the financial system and
Banco Galicia as from the last months of 2001 and during the first months of
2002, the Bank requested the financial assistance of the Argentine Central Bank
in order to address liquidity shortages. To that end, the Bank gave secured
loans as collateral. The Bank's requests for financial assistance to the
Argentine Central Bank comprised the period from December 2001 to May 2002,
until the approval of the Plan on May 3, 2002. At the close of the fiscal year,
the financial assistance granted by the Argentine Central Bank to the Bank
amounted to Ps.5,581.5 million (including adjustments and interest). This amount
included Ps.792.1 million, which corresponded to borrowings from the Argentine
Central Bank used to pay off financial assistance received from the former Bank
Liquidity Fund. These borrowings maintained the original conditions which
included the application of the CER adjustment. As of December 31, 2002, the
remaining of the financial assistance from the Argentine Central Bank for
liquidity shortages was 30-day revolving facility accruing an interest rate
equivalent to 80% of the 4/5 parts of the interest rate of the 30-day Lebac or
of the minimum term Lebac auctioned. On May 2003, the government released rules
to establish a voluntary procedure for the restructuring of the financial
assistance granted by the Argentine Central Bank to financial institutions
during the crisis that affected the financial system as from 2001 into long term
liabilities, under certain conditions. See "Item 4. Information on the
Company--Argentine Banking Regulation."

Due to the emergency situation suffered by the Argentine economy and the
financial system in particular, which implied difficulties to access credit both
in local and foreign markets, the Bank's financial capacity to meet its
contractual obligations was affected. Thus, most of the Bank's debt at the end
of December 31, 2002 is in payment default and under a restructuring process,
except for Ps.389.4 million of negotiable obligations issued in 2002 in
connection with the New York Branch's debt restructuring. The Ps.1,555.8 million
negotiable obligations arising

                                     -159-

<PAGE>

from the restructuring in 2002 of Galicia Uruguay's deposits are also current.
See "--Contractual Obligations and Contingent Liabilities" and "Defaults,
Divident Arrearages and Delinquencies."

As of December 31, 2002, the total amount of negotiable obligations included
Ps.128.1 million in principal of negotiable obligations of the regional credit
card companies, representing negotiable obligations amounts that had not been
renegotiated as of the year end.

The following table sets forth the Group's outstanding debt securities as of
December 31, 2002.

<TABLE>
<CAPTION>


                                                                                                    PRINCIPAL AMOUNT
                                                                                    ANNUAL       (in millions of December
                                                                       MATURITY  INTEREST RATE   31, 2002, constant pesos)
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>       <C>             <C>
 SHORT TERM DEBT SECURITIES
   Tarjetas del Mar ...............................................      2002       14.92%             Ps.    20.8
   Tarjeta Naranja.................................................      2002       16.46%                    99.3
   Tarjetas Cuyanas ...............................................      2002       15.96%                     7.5
   Tarjeta Comfiar ................................................      2002       16.22%                     0.5
                                                                                                 -------------------------
TOTAL SHORT TERM...................................................                                    Ps.   128.1
LONG TERM DEBT SECURITIES
   Banco Galicia-  US$150 million FRN..............................      2002        5.48%             Ps.   504.5
   Banco Galicia 5th Class FRN (MIGA) - Global Program.............      2005        4.00%                   149.0
   Banco Galicia 4th Class FRN (MIGA) -  Global Program............      2005        4.00%                    35.8
   Banco Galicia 6th Class Notes - Global  Program(1)..............      2007        7.88%                   244.2
   Banco Galicia 7th Class FRN - Global  Program(1)................      2007        5.95%                   145.2
   Banco Galicia - US$200 million Yankee Bond......................      2003        9.00%                   672.0
   Galicia Uruguay - Negotiable Obligations(2).....................      2011        2.00%                 1,555.8
                                                                                                 -------------------------
TOTAL LONG TERM DEBT SECURITIES....................................                                    Ps. 3,306.5
--------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT TERM + LONG TERM DEBT SECURITIES.......................                                    Ps. 3,434.6
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Issued in 2002 as part of the restructuring of the former New York Branch's
    debt.

(2) Issued in 2002 as part of the restructuring of Galicia Uruguay's deposits.

(3) Excludes subordinated negotiable obligations for US$43 million held by the
    holding company.

The percentage of total liabilities (including shareholders' equity) represented
by negotiable obligations and liabilities with banks and international entities
increased in comparison with the previous fiscal year and also compared with the
corresponding percentage of deposits, since the latter were pesified at the
parity of Ps.1.4 per US dollar, while foreign debts are valued at the market
exchange rate.

The caption "Advance from the Argentine Central Bank-hedge bond" stated in the
Table "Liabilities" for Ps.2,468.4 million (including interests and the
adjustment by the CER) represents the loan to be requested to the Argentine
Central Bank for the purchase of the hedge bond. The Bank has the option to
purchase the hedge bond using secured loans pursuant to the provisions of Decree
No.2167/02.

The item "Other Liabilities" mainly comprises (i) loans from the Fiduciary Fund
for the Assistance to Financial Institutions and Insurance Companies and from
Sedesa, granted by these institutions to the Bank as part of the Plan, and
amounting to Ps.132.0 million and Ps.217.4 million, respectively as of December
31, 2002; (ii) allowances for other contingencies for Ps.331.7 million; and (iv)
debt of the operating regional credit-card companies assumed in the
restructuring of these companies' negotiable obligations during 2002 for
Ps.165.5 million.

CONTRACTUAL OBLIGATIONS AND CONTINGENT LIABILITIES

In connection with its operating activities, the Group enters into certain
contractual obligations. Certain of the Group's contractual obligations in the
tables below were issued as a result of debt restructuring carried in 2002. See
notes 14 and 15 to the audited consolidated financial statements.

                                     -160-

<PAGE>

The following table shows the principal amounts of the Bank's contractual
obligations and their contractual interest rates.

<TABLE>
<CAPTION>
                                                         ANNUAL                             LESS THAN    1 TO 3    3 TO 5     OVER 5
                                          MATURITY    INTEREST RATE   TOTAL       PAST DUE    1 YEAR      YEARS     YEARS     YEARS
------------------------------------------------------------------------------------------------------------------------------------
                                                     (in millions of December 31, 2002, constant pesos)
<S>                                      <C>        <C>             <C>         <C>         <C>         <C>       <C>       <C>
Banco Galicia - US$200 million Yankee
  Bond..................................    2003              9.0%  Ps.  672.0           -  Ps.  672.0         -         -         -
Banco Galicia - US$150 million FRN.         2002              5.5%       504.5       504.5           -         -         -         -
Banco Galicia 4th Class FRN (MIGA) -
  Global Program........................    2005              4.0%        35.8         9.0         9.0      17.8         -         -
Banco Galicia 5th Class FRN (MIGA) -
  Global Program........................    2005              4.0%       149.0        37.4        37.4      74.2         -         -
Banco Galicia 6th Class Notes - Global
  Program (1)...........................    2007              7.9%       244.3           -           -      81.4  Ps.162.9         -
Banco Galicia 7th Class FRN - Global
  Program (1)...........................    2007    Libor + 400 bp       145.2           -           -      48.4      96.8         -
Galicia Uruguay - Negotiable
  Obligations (2)                           2011              2.0%     1,555.8           -       273.0     377.0     302.0  Ps.603.8
Negotiable Obligations- Tarjetas del
  Mar                                       2002             14.9%        20.8        20.8           -         -         -         -
Negotiable Obligations- Tarjeta
  Naranja                                   2002             16.5%        99.2        99.2           -         -         -         -
Negotiable Obligations- Tarjetas
  Cuyanas                                   2002             16.0%         7.5         7.5           -         -         -         -
Negotiable Obligations- Tarjeta
  Comfiar                                   2002             16.2%         0.5         0.5           -         -         -         -
Banco Galicia - Foreign Banks'
  Dollar-denominated Syndicated Loan....    2002              7.9%       840.8       840.8           -         -         -         -
Banco Galicia - Foreign Banks'
  Dollar-denominated Syndicated Loan....    2002              7.0%       275.7       275.7           -         -         -         -
Banco Galicia - International
  Finance Corporation Loan..............    2002              4.8%       823.9       823.9           -         -         -         -
Banco Galicia - International Finance
  Corporation Loan......................    2008    Libor + 327 bp       218.6        38.4        43.2      56.2      46.1      34.7
Banco Galicia - International
  American Investment Corp.Loans........ Various              5.1%       233.7        15.5       144.5      63.9       7.9       1.9
Banco Galicia -  FMO Loans.............. Various              4.8%        64.9                    30.6      15.4      18.9
Banco Galicia - BICE Loans.............. Various           Various       183.9        40.0        45.1      64.8      27.9       6.1
Cayman Branch - Trade and Financial
  Loans                                  Various           Various       670.5       660.0         8.2       2.3         -         -
Others.................................. Various           Various        44.7        22.0        18.3       1.1       2.3       1.0
TOTAL...................................                            Ps.6,791.3  Ps.3,395.2  Ps.1,281.3  Ps.802.5  Ps.664.8  Ps.647.5
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Issued in 2002 as part of the restructuring of the former New York
      Branch's debt.

(2)   Issued in 2002 as part of the restructuring of Galicia Uruguay's deposits.

(3)   Excludes subordinated negotiable obligations for US$43 million held by the
      holding company.

In the table above, the principal amounts of the Bank's obligations with local
and foreign creditors contractually in payment default are shown under the
heading "Past Due."

The table above does not include the loans granted to the Bank by the Fiduciary
Fund for the Assistance to Financial Institutions and Insurance Companies and
from Sedesa, as part of the implementation of the Plan, and amounting to
Ps.132.0 million and Ps.217.4 million, respectively as of December 31, 2002.

The loan from Sedesa was granted for the US dollar amount equivalent to Ps.200
million (in current pesos of May 2002) at the exchange rate prevailing on the
day prior to that of the disbursement, that is US$64.5 million, with a five-year
term and an interest rate equal to the 180-day LIBOR rate plus 300 basis points.

The loan from the FFAEFyS was granted for the US dollar amount equivalent to
Ps.100 million (in current pesos of May 2002) at the exchange rate prevailing on
the day prior to that of the disbursement, that is US$32.3 million, with a
three-year term and an interest rate equivalent to the 180-day LIBOR plus 400
basis points, with a floor of 8.07%. This loan was collateralized by secured
loans recorded under "Miscellaneous Receivables" and amounting to Ps.125 million
as of December 2002.

Given that most of the Bank's contractual obligations with foreign creditors and
certain contractual obligations with local creditors are currently in payment
default and under a restructuring process, in the following table, all of the

                                     -161-

<PAGE>

principal amount of the Bank's contractual obligations where a payment default
was incurred is shown under the Heading "Past Due/Callable."

<TABLE>
<CAPTION>

                                                      ANNUAL                    PAST DUE/   LESS THAN   1 TO 3     3 TO 5     OVER 5
                                        MATURITY  INTEREST RATE      TOTAL      CALLABLE     1 YEAR      YEARS      YEARS     YEARS
------------------------------------------------------------------------------------------------------------------------------------
                                                     (in millions of December 31, 2002, constant pesos)
<S>                                   <C>        <C>               <C>         <C>          <C>        <C>        <C>       <C>
Banco Galicia - US$200 million
  Yankee Bond.........................     2003            9.0%    Ps.  672.0  Ps.  672.0          -          -          -         -
Banco Galicia - US$150 million FRN....     2002            5.5%         504.5       504.5          -          -          -         -
Banco Galicia 4th Class FRN (MIGA)
  - Global Program....................     2005            4.0%          35.8        35.8          -          -          -         -
Banco Galicia 5th Class FRN (MIGA)
  - Global Program....................     2005            4.0%         149.0       149.0          -          -          -         -
Banco Galicia 6th Class Notes -
  Global Program (1)..................     2007            7.9%         244.3           -          -   Ps. 81.4   Ps.162.9         -
Banco Galicia 7th Class FRN - Global
  Program (1).........................     2007  Libor + 400 bp         145.2           -          -       48.4       96.8         -
Galicia Uruguay - Negotiable
  Obligations(2)......................     2011            2.0%       1,555.8           -      273.0      377.0      302.0  Ps.603.8
Negotiable Obligations- Tarjetas
  del Mar.............................     2002           14.9%          20.8        20.8          -          -          -         -
Negotiable Obligations- Tarjeta
  Naranja.............................     2002           16.5%          99.2        99.2          -          -          -         -
Negotiable Obligations- Tarjetas
  Cuyanas.............................     2002           16.0%           7.5         7.5          -          -          -         -
Negotiable Obligations- Tarjeta
  Comfiar.............................     2002           16.2%           0.5         0.5          -          -          -         -
Banco Galicia - Foreign Banks'
Dollar-denominated Syndicated Loan....     2002            7.9%         840.8       840.8          -          -          -         -
Banco Galicia - Foreign Banks'
  Dollar-denominated Syndicated Loan..     2002            7.0%         275.7       275.7          -          -          -         -
Banco Galicia - International Finance
  Corporation Loan....................     2002            4.8%         823.9       823.9          -          -          -         -
Banco Galicia - International Finance
  Corporation Loan....................     2008  Libor + 327 bp         218.6       218.6          -          -          -         -
Banco Galicia - International
  American Investment Corp.Loans......  Various            5.1%         233.7       233.7          -          -          -         -
Banco Galicia -  FMO Loans............  Various            4.8%          64.9        64.9          -          -          -         -
Banco Galicia - BICE Loans............  Various         Various         183.9        46.8       38.3       64.8       27.9       6.1
Cayman Branch - Trade and Financial
  Loans...............................  Various         Various         670.5       670.5          -          -          -         -
Other.................................  Various         Various          44.7        44.7          -          -          -         -
TOTAL                                                              Ps.6,791.3  Ps.4,708.9   Ps.311.3   Ps.571.6   Ps.589.6  Ps.609.9
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Issued in 2002 as part of the restructuring of the former New York Branch's
    debt.

(2) Issued in 2002 as part of the restructuring of Galicia Uruguay's deposits.

(3) Excludes negotiable obligations for US$43 million held by the holding
    company.

As of December 31, 2002, Banco Galicia Uruguay held an aggregate amount of
Ps.1,343.5 million (equivalent to US$399.5 million) in Banco Galicia and its
Cayman Branch. This amount is currently under restructuring together with the
rest of the Bank's Head Office's and the Cayman Branch's foreign debt. Being an
intercompany transaction, this amount is not shown in the Group's consolidated
deposits.

Due to the emergency situation of the Argentine economy in 2002, to settle
dollar-denominated negotiable obligations maturing during 2002, the operating
regional credit-card companies in which the Bank holds majority interests
offered holders the payment option established for those instruments by the new
government regulations in this respect (pesification at the Ps.1 per US dollar
exchange rate and adjustment by the CER variation) or, alternatively, the
possibility to enter into an agreement establishing the settlement of the
negotiable obligations and the subscription of new dollar-denominated 8-year
debt certificates secured by a trust. Both Tarjeta Naranja S.A. and Tarjetas
Cuyanas S.A. invited holders to exchange their negotiable obligations for debt
certificates issued under a trust. Both companies assigned a percentage of their
cash flow to secure the payment of their obligations to a trust for the benefit
of holders. By means of these payment alternatives, at the close of the fiscal
year, 87% of the original negotiable obligations had been settled. The
negotiable obligations' amount restructured as of December 31, 2002 was US$63.5
million, and the amount recorded under "Other Liabilities Resulting from
Financial Intermediation" was Ps.166.8 million, representing the present value
of the peso cash flow granted as security for the restructured debt.

                                     -162-

<PAGE>

As of December 31, 2002, the total amount of negotiable obligations in the
Group's balance sheet included Ps.128.1 million in principal of negotiable
obligations of the regional credit card companies. This amount represents
dollar-denominated negotiable obligations of the regional credit-card companies
issued under Argentine law and maturing in 2002 that had not been refinanced as
of December 31, 2002. Of this amount, (i) US$28 million corresponded to
negotiable obligations of Tarjeta Naranja S.A. held by the Bank's Cayman Branch
for which maturity was extended, valued using the market exchange rate at the
close of the fiscal year; and (ii) US$25.2 million were due and unpaid, of which
US$15.5 million corresponded to negotiable obligations issued by Tarjetas del
Mar S.A., valued in accordance with the applicable pesification regulations
(Ps.1.0 per US dollar exchange rate plus the CER adjustment), and the remaining
dollar amount was valued at the estimated settlement value. If the amount due
and unpaid had been valued at the market exchange rate at year-end, a Ps.40.7
million loss would have been recorded. As of March 31, 2003, Tarjetas del Mar
S.A. had restructured 87.7% of the above mentioned negotiable obligations.

These companies intend to restructure Ps.323.5 million of intercompany debt with
Banco Galicia, including Tarjeta Naranja's negotiable obligations mentioned in
the previous paragraph. A proposal was presented to the Argentine Central Bank's
officers designated by such regulatory institution to supervise the management
of the Bank's operations and is pending approval at the date hereof.

LIQUIDITY

Our consolidated statements of cash flows were prepared using the measurement
methods prescribed by the Argentine Central Bank, but in accordance with the
presentation requirements of Statement of Financial Accounting Standards No. 95:
Statement of Cash Flows ("SFAS No. 95"). SFAS 95 establishes specific
presentation requirements and additional disclosures but does not provide
guidance with respect with the inflation adjusted financial statements. The
effect of inflation restatements and foreign exchange gains and losses on cash
flow related to financing and operating activities has been included in the line
item "Monetary loss", and the effect of inflation on cash balances has been
included in a separate line item after cash flows from investing activities.

Cash Flows from Operating Activities. Net cash (used in) provided by operating
activities amounted to Ps.(928.2) million in 2002, Ps.2,549.7 million in 2001
and Ps.1,168.4 in 2000.

In 2002 we had net losses of Ps.(1,458.8) that were partially offset by:

         -        The increase in allowances for loans and other losses, net of
                  reversals amounting to Ps.2,063.7 million primarily due to the
                  deterioration of our loans portfolio; and

         -        The reversal of the monetary loss amounting to Ps.1,566.2
                  million due to our net asset position and the high inflation
                  rate of the year (approximately 118.4%).

Such positive effects were partially offset by:

         -        The foreign currency position compensation amounting to
                  Ps.(1,358.2) millions;

         -        The accrued CER of Ps.(1,616.5) million; and

         -        Unrealized foreign exchange gain of Ps.(512.4).

In 2001 we had net gains of Ps.262.3 that were partially offset by:

         -        The increase in other liabilities of Ps.2,183.5 million; and

         -        The increase in allowances for loans and other losses, net of
                  reversals amounting to Ps.1,044.7 primarily due to the
                  deterioration of our loans portfolio.

Such positive effects were partially offset by:

         -        The decrease in government securities - trading of
                  Ps.(1,313.0) million; and

         -        The accretion of discount on available for sale securities
                  Ps.(180.1) million.

In 2000 we had net gains of Ps.196.4 that were partially offset by:

                                     -163-

<PAGE>

         -        The increase in government securities - trading of Ps.519.6
                  million;

         -        The increase in allowances for loans and other losses, net of
                  reversals amounting to Ps.277.0 million; and

         -        The increase in other liabilities of Ps.187.8 million.

Such positive effects were partially offset by:

         -        The accretion of discount on available for sale securities
                  Ps.(0.9) million.

Cash Flows from Investing Activities. Net cash provided by (used in) investing
activities amounted to Ps.2,593.7 million in 2002, Ps.3,459.1 million in 2001
and Ps.(1,504.0) in 2000. The Group significantly reduced its loan origination
activities in 2002 and 2001 due to the current economic crisis in Argentina.

In 2002, substantially all of the resources provided by investing activities
were attributable to collections of our loans amounting to Ps.2,591.1.

In 2001, the resources provided by investing activities were mainly due to:

         -        Collections of our loans amounting to Ps.1,035.5 million; and

         -        Decrease in deposits from the Argentine Central Bank of
                  Ps.2,960.5 million.

Such positive inflows were partially offset by:

         -        Purchase of available for sale securities of Ps.(409.4)
                  million; and

         -        Acquisitions of bank premises and equipment, miscellaneous and
                  intangible assets Ps.(421.1).

In 2000, the resources used in investing activities were mainly due to:

         -        Origination of loans amounting to Ps.(1,137.7) million;

         -        Decrease in deposits from the Argentine Central Bank of
                  Ps.(605.6) million;

         -        Purchase of available for sale securities of Ps.(197.0)
                  million; and

         -        Acquisitions of bank premises and equipment, miscellaneous and
                  intangible assets Ps.(112.8).

Such outflows were partially offset by the proceeds on the sale of the Galtrust
I securities amounting to Ps.102.5 and the proceeds on the sale of available for
sale securities amounting to Ps.404.4.

Cash Flows from Financing Activities. Net cash (used in) provided by financing
activities amounted to Ps.(1,542.4) million in 2002, Ps.(6,233.3) million in
2001 and Ps.323.0 in 2000.

In 2002, the net cash used in financing activities was mainly due to the
payments on deposits of Ps.(5,964.7) that was partially offset by:

         -        The proceeds received from short-term borrowings amounting to
                  Ps.3,367.8 million; and

         -        The proceeds received in repurchase agreements of Ps.1,102.8.

In 2001, the net cash used in financing activities was mainly due to:

         -        The payments on deposits of Ps.(6,035.8) million;

         -        The payment on credit facilities long-term of Ps.(2,937.6)
                  million; and

         -        The payments on short-term borrowings of Ps.(1,050.4) million.

Such outflows were partially offset by proceeds received on short-term
borrowings amounting to Ps.3,936.2 million.

In 2000, the net cash provided by financing activities was mainly due to:

                                     -164-

<PAGE>

         -        The proceeds on deposits received of Ps.352.0 million;

         -        The proceeds on credit facilities long-term of Ps.574.9
                  million; and

         -        The proceeds on short-term borrowings of Ps.135.0 million.

Such inflows were partially offset by payments on credit facilities long-term of
Ps.(540.7) million and increase in repurchase agreements of Ps.(180.7) million.

The holding company conducts all of its operations through its subsidiaries.
Grupo Galicia does not anticipate conducting operations at the holding company
level. Dividends on our Banco Galicia shares are our primary source of funds to
pay for our expenses. As discussed in "Item 8--Dividends and Dividend Policy",
we have not received dividends from Banco Galicia since October 2001. In
addition, funds maintained on deposit at Galicia Uruguay that would otherwise
have been available to pay our operating expenses, was restructured into (i)
subordinated negotiable obligations for US$43 million, (ii) negotiable
obligations for US$2.5 million, and (iii) a savings account available on demand
for US$1.4 million.

As of December 31, 2002, on a consolidated basis, Grupo Galicia had US$571.9
million in available cash (defined as total cash on hand and cash equivalents).

Therefore, we have limited available cash relative to the business size of Banco
Galicia, our largest operating subsidiary, and its financial commitments. Our
inability to generate sufficient cash flows from operations to sufficiently
cover our operating costs and debt service obligations under their contractual
terms has caused us to cease payment on our debt obligations. This situation,
coupled with other effects on Grupo Galicia and Banco Galicia, including the
overall deterioration in the Bank's loan portfolio, has severely impacted our
ability to continue as a going concern. Management believes that other sources
of funding will need to be available to the Group in order to satisfy its cash
needs for the foreseeable future if the Bank does not complete its debt
restructuring. In light of the economic conditions in Argentina it is unlikely
that any long-term financing will be available to us for the foreseeable future.
To address our constraints and maintain our viability during this difficult
period, in addition to ceasing payments on our debt obligations, we implemented
a number of short-term measures which included reducing our operating costs by
streamlining the Bank's operations as described in "Results of Operations of
Grupo Galicia for the Fiscal Years Ended December 31, 2002 and December 31, 2001
and the Annualized Year Ended December 31, 2000--Administrative Expenses--FY
2002 compared to FY 2001", we focused on maximizing collections from our
existing loan portfolio and sought to restructure our financial indebtedness,
each as described in this annual report. To continue as a going concern, the
Bank must successfully implement its strategy of generating income mainly from
the provision of financial services, as we believe that lending activities will
not constitute a significant source of income in the short term. We must
overcome significant obstacles to do so, including the successful restructuring
of the Bank's foreign debt and of its debt with the Argentine Central Bank
(excluding the advance to be granted to the Bank for the purchase of the hedge
bond). See "Item 3. Key Information--Risk Factors relating to the Bank--The
Bank's inability to pay its debt service obligations under their current terms
could severely impact our ability to continue as a going concern."

Galicia Uruguay's and its subsidiary's activities were suspended in 2002 and are
still suspended at the date hereof. Galicia Uruguay's consolidated liquidity
amounted as of December 31, 2002, to Ps.178.3 million of cash, deposits at the
Central Bank of Uruguay, and short-term placements in correspondent banks. These
funds were not available to the Group on a consolidated basis, due to the fact
that they were reserved for the payment of Galicia Uruguay's restructured
deposits.

As of December 2002, the Bank's New York Branch was being wound down. As a
result its cash as of that date was very low (Ps.14.2 million) and reserved by
the OCC in order to ensure the completion of the closing process, which occurred
on January 30, 2003.

The following discussion of the Bank's liquidity excludes the consolidated
companies.

                                     -165-

<PAGE>

BANCO GALICIA (UNCONSOLIDATED)

Banco Galicia's policy is to maintain a level of liquid assets that allows it to
meet financial commitments at contractual maturity, take advantage of potential
investment opportunities, and meet demand for credit. To set the appropriate
level, forecasts are made based on historical experience and analysis of
possible scenarios. This enables management to project funding needs and
alternative funding sources, as well as excess liquidity and placement
strategies for such funds.

As of December 31, 2002 the Bank's liquidity was as follows:

<TABLE>
<CAPTION>
                                                    AS OF DECEMBER 31, 2002
-------------------------------------------------------------------------------------
                                   (in millions of December 31, 2002, constant pesos)
<S>                                                       <C>
Legal Requirement...........                              Ps. 181.9
Excess Liquidity............                                  365.4
                                                -------------------------------------
TOTAL LIQUIDITY (1) ........                              Ps. 547.3
-------------------------------------------------------------------------------------
</TABLE>

(1) Excludes Ps.5 million of cash of the Cayman Branch and Ps.16 million of the
    regional credit card companies.

Legal liquidity refers to the minimum cash requirements set by the regulations
of the Argentine Central Bank and to be complied on the Bank's deposits in
Argentina only. Excess liquidity consists of the balances in excess of the
minimum legal requirements held in the Bank's peso- and dollar-denominated
accounts at the Argentine Central Bank and short-term liquid assets (mainly
Lebac holdings and overnight placements in foreign banks).

Rules in effect as of December 31, 2002, regarding legal requirements set forth
by the Argentine Central Bank defined "minimum cash requirements" and "minimum
fund placement requirements". See "--Argentine Banking Regulation--Legal reserve
requirements." Regulations allowed the already mentioned "Special Funds former
Almafuerte and Mendoza Banks" to be considered as a lower requirement, as per
Resolution No.36/03 of the Argentine Central Bank See "--Description of
Consolidated Assets and Liabilities--Assets." The assets computable for
compliance with this requirement are the technical cash, which comprises notes
and coins and the balances of the peso- and dollar-denominated deposit accounts
and of the escrow accounts in favor of the clearing houses held at the Argentine
Central Bank. In accordance with the Argentine Central Bank regulations, the
Bank complies in excess with the "minimum fund placement requirements" by
computing the amount of its holdings of Argentine government bonds at 9%
maturing in 2002 as of June 30, 2002. On this respect, the Argentine Central
Bank has established a schedule that exhausts the amounts computable in July
2003. In the liquidity table above, the "minimum placements requirements" are
not included within the legal requirements, since the Bank had exceeded this
requirement, and the excess is not computable for compliance with the "minimum
cash requirements".

The financial system's and the Bank's liquidity were significantly affected by
the severe economic and political crisis occurred in the last quarter of 2001
and the first half of 2002, by the devaluation of the Argentine currency in
January 2002, and by the pesification and the restructuring of deposits, among
others.

Within this unprecedented context, the Bank restated its liquidity policy
parameters. Currently, the Bank's liquidity policy parameters vary depending on
the amounts and the remaining maturity of the relevant liabilities that were
left after the crisis. As such, the Bank considered its restructured deposits
and its free deposits in Argentina and focused its analysis on the behavior of
such deposits during the crisis. Deposits were classified into wholesale
deposits and retail deposits. Wholesale deposits are formed by time deposits and
deposits in savings accounts raised by the Trading Desk. Two liquidity levels
are being currently considered: the "Operational Liquidity" (to address the
Bank's daily operations in Argentina) and the "Additional Liquidity" (excess
amount to be available to face a possible crisis). As a result of the analysis
performed, the Bank defined an "Additional Liquidity" minimum parameter, which
was established at a significant percentage of the necessary funds to bear the
deposits' "worse- case" situation faced during the past crisis. With respect to
"Operational Liquidity", the Bank established a floor as a percentage of retail
deposits plus escrow accounts' balances held at the Argentine Central Bank. As
of December 31, 2002, additional liquidity amounted to Ps.368.2 million,
reaching 58% of the "worse-case" for deposits.

                                     -166-

<PAGE>

The Bank maintained similar liquidity levels in the first five months of 2003,
after additional measures were taken by the government to continue freeing the
restructured deposits still in the "corralon", which measures had a high level
of acceptance within the public in general. For restructured deposits originally
constituted in pesos and deposits originally constituted in foreign currency up
to Ps.42,000 or US$30,000, depositors could request, between April 8 and May 23,
2003, the reimbursement by financial institutions of their deposits in cash and
in pesos. The Bank retained approximately 75% of these deposits. See "--The
Argentine Financial System in 2002."

CONSOLIDATED LIQUIDITY GAP

As of December 31, 2002, the gaps between maturities of financial assets and
liabilities, based on contractual maturity were as follows:

<TABLE>
<CAPTION>
                                                                             AS OF DECEMBER 31, 2002
                                             -------------------------------------------------------------------------------------
                                              PAST DUE/     LESS THAN    1 - 5 YEARS    5 - 10 YEARS      OVER 10          TOTAL
                                              CALLABLE       ONE YEAR                                      YEARS
                                                     (in millions of December 31, 2002, constant pesos, except for ratios)
<S>                                          <C>          <C>            <C>            <C>            <C>           <C>
     ASSETS
PESOS - ADJUSTABLE BY CER.................            -   Ps.    616.2   Ps. 1,385.5    Ps.  5,476.4   Ps.  1,952.1  Ps.   9,430.2
  Government Securities ..................            -           50.6          50.6               -              -          101.2
  Financial Trusts (Galtrust I and
  Secured Loans)..........................            -            1.5          92.5           236.5          378.2          708.7
  Loans...................................            -          564.1       1,195.5         5,161.8        1,573.9        8,495.3
  Secured Loans Granted as Guarantees.....            -              -          46.9            78.1              -          125.0
PESOS - ADJUSTABLE BY CVS.................            -           23.7          59.8           198.9           70.5          352.9
  Loans...................................            -           23.7          59.8            49.8           39.0          172.3
  Financial Trusts (Galtrust II and V -
  Mortgage Trust).........................            -              -             -           149.1           31.5          180.6
PESOS.....................................            -        1,090.2         193.9           175.3            0.3        1,459.7
  Cash and Due from Banks.................            -          341.2             -               -              -          341.2
  Government Securities...................            -           38.6             -               -              -           38.6
  Corporate Debt Securities...............            -           28.6          20.8               -              -           49.4
  Special Funds and Other.................            -           33.0          91.2           150.7              -          274.9
  Loans...................................            -          560.8          81.9            24.6            0.3          667.6
  Other Credits...........................            -           88.0             -               -              -           88.0
DOLLARS...................................            -        1,635.5       3,450.8         4,835.5              -        9,921.8
  Cash and Due from Banks.................            -          276.3             -               -              -          276.3
  Overnight ..............................            -            9.6             -               -              -            9.6
  Government Securities...................            -          565.0         630.1           423.6              -        1,618.7
  Compensatory and Hedge Bonds to be
     Received.............................            -              -       2,638.9         4,398.3              -        7,037.2
  Corporate Debt Securities...............            -           81.7             -               -              -           81.7
  Loans...................................            -          681.1         181.8            13.6              -          876.5
  Other Credits...........................            -           21.8             -               -              -           21.8
                                             -------------------------------------------------------------------------------------
TOTAL ASSETS..............................            -   Ps.  3,365.6   Ps. 5,090.0    Ps. 10,686.1   Ps.  2,022.9  Ps.  21,164.6
LIABILITIES
PESOS - ADJUSTABLE BY CER.................            -          292.1       2,614.9         1,587.0            6.5        4,500.5
  Time Deposits...........................            -          292.1         913.7            45.9              -        1,251.7
  Advance from Argentine Central Bank -
Hedge Bond................................            -              -         909.1         1,515.2              -        2,424.3
  Lines of Credit- Domestic Banks.........            -              -             -            25.9            6.5           32.4
  Lines of Credit- Argentine Central Bank             -              -         792.1               -              -          792.1
PESOS.....................................         36.4        6,716.9          98.9             6.2              -        6,858.4
  Demand Deposists .......................            -        1,024.3             -               -              -        1,024.3
  Time Deposits...........................            -          733.3             -               -              -          733.3
  Restructured Deposits (Cedros)..........            -           12.9           6.2               -              -           19.1
  Negotiable Obligations..................         20.8              -             -               -              -           20.8
  Lines of Credit- Domestic Banks ........         15.6           38.3          92.7             6.2              -          152.8
  Lines of Credit- Argentine Central
  Bank....................................            -        4,789.4             -               -              -        4,789.4
  Other Liabilities.......................            -          118.7             -               -              -          118.7
DOLLARS...................................      5,111.6        1,107.2       1,990.6         1,157.4              -        9,366.8
  Demand Deposists .......................        137.6          129.0             -               -              -          266.6
  Time Deposits...........................        178.3          410.2         624.5           553.7              -        1,766.7
  Lines of Credit- Domestic Banks.........         46.8           26.9         297.6               -              -          371.3
  Negotiable Obligations..................      1,468.6          273.0       1,068.5           603.7              -        3,413.8
  Lines of Credit.........................      3,157.2              -             -               -              -        3,157.2
  Other Liabilities ......................        123.1          268.1             -               -              -          391.2
                                             -------------------------------------------------------------------------------------
TOTAL LIABILITIES.........................   Ps.5,148.0   Ps.  8,116.2   Ps. 4,704.4    Ps.  2,750.6   Ps.      6.5  Ps.  20,725.7
</TABLE>

                                     -167-

<PAGE>

<TABLE>
<S>                                        <C>            <C>            <C>            <C>            <C>           <C>
Asset / Liability Gap....................     (5,148.0)       (4,750.6)        385.6         7,935.5        2,016.4          438.9
Cumulative Gap...........................     (5,148.0)       (9,898.6)     (9,513.0)       (1,577.5)         438.9
Ratio of Cumulative Gap to Cumulative
  Liabilities............................      (100.00)%        (74.63)%      (52.94)%         (7.61)%         2.12%
Ratio of Cumulative Gap to Total
  Liabilities............................       (24.84)%        (47.76)%      (45.90)%         (7.61)%         2.12%

Asset / Liability Gap CER................            -           324.1      (1,229.4)        3,889.4        1,945.6        4,929.7
Asset / Liability Gap CVS................            -            23.7          59.8           198.9           70.5          352.9
Asset / Liability Gap Int. Rate Pesos....        (36.4)       (5,656.7)         95.0           169.1            0.3       (5,398.7)
Asset / Liability Gap Int. Rate Dollars
  (1)....................................     (5,111.6)          528.3       1,460.2         3,678.1              -          555.0

Other Assets.............................            -         2,194.2
Other Assets Dollars.....................            -           339.1
Other Liabilities........................            -         1,008.6
Other Liabilities Dollars................            -           339.1
Total Assets.............................            -         5,898.9       5,090.0        10,686.1        2,022.9       23,697.9
Total Liabilities........................      5,148.0         9,463.9       4,704.4         2,750.4            6.5       22,073.4
Gap......................................  Ps.(5,148.0)   Ps. (3,565.0)  Ps.   385.6    Ps.  7,935.5   Ps.  2,016.4  Ps.   1,624.5
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes Ps. 71.8 million from net other assets and liabilities.

In the table above, the total principal amounts of debts in which a payment
default has been incurred and subject to renegotiation are shown in a separate
column under the heading "Past Due/Callable."

Given that contractual maturity is used, financial assets and liabilities
without a fixed maturity date are assumed to mature in less than one month. This
category includes demand deposits (current accounts, other types of demand
deposits and saving accounts).

In addition, Ps.4,789.4 million of the financial assistance provided by the
Argentine Central Bank for liquidity reasons was included in the "Less than One
Year" bucket because, as of the close of the fiscal year, this debt was a 30-day
revolving facility. The Ps.792.1 million borrowing from the Argentine Central
bank, used to pay off financial assistance received from the former Bank
Liquidity Fund, is included in the corresponding buckets, in accordance with its
contractual terms. These borrowings maintained the original contractual
conditions. After the close of the 2002 fiscal year, the government issued rules
providing for the possibility for financial institutions to apply for a
restructuring of the above mentioned liabilities into peso liabilities maturing
in 70 or 120 monthly installments. In accordance with Communique "A"3940 of the
Argentine Central Bank, financial institutions that wish to make use of this
special repayment system, shall have received, before December 5, 2003, the
Argentine Central Bank's approval to the terms and conditions for the
restructuring of such financial institution's foreign debt.

Simulated results based on these gaps are not shown in this annual Report as
they were made meaningless by the liquidity crisis of the second half of 2001
and later events, such as the devaluation of the peso in January 2001, the
"pesification", the mandatory restructuring of bank deposits, and the Bank's own
foreign debt restructuring process.

CAPITAL

The capital adequacy of Grupo Galicia is not under the supervision of the
Argentine Central Bank.

Grupo Galicia's capital management policy is designed to ensure prudent levels
of capital.

Grupo Galicia, as well as its controlled companies, except for Banco Galicia and
the Sudamericana Holding S.A.'s affiliates mentioned in the paragraph below, are
regulated by the Commercial Companies' Law. In section No. 186, the Law
establishes that the capital of a corporation (sociedad anonima) cannot be less
than Ps.12,000 (twelve thousand pesos).

The insurance companies held by Sudamericana Holding S.A. are: Galicia Vida
Compania de Seguros S.A., Galicia Retiro Compania de Seguros S.A., Aseguradora
de Personas Galicia S.A. and Instituto de Salta Compania de Seguros de Vida S.A.
These companies meet the minimum capital requirements set by General Resolution
No. 25,804 of Argentina's Superintendency of Insurance. See "Item 4. Information
on the Company--Government Regulation--Minimum Capital Requirements of
Non-Banking Companies."

                                     -168-

<PAGE>

As of September 30, 2002, the computable capital of the companies held by
Sudamericana Holding S.A. exceeded the minimum requirement of Ps.8.3 million by
Ps.38.7 million, representing an excess of approximately 466%.

Sudamericana Holding S.A. also holds interests in Medigap Salud S.A. (former
Hartford Salud S.A.) and Sudamericana Asesores de Seguros S.A.. Both companies
are regulated by the Commercial Companies' Law.

The capital adequacy of Banco Galicia on an unconsolidated basis and
consolidated with its significant subsidiaries, Galicia Uruguay and the five
regional credit card companies that Banco Galicia controls is supervised by the
Argentine Central Bank. The Argentine central Bank's minimum capital requirement
regime was suspended during the whole of 2002. In May 2002, the Argentine
Central Bank has issued a new minimum capital requirement regime, without
specifying the date in which this regime will become effective. See "--Argentine
Banking Regulation--Capital Adequacy Requirements."

As of December 31, 2001, computable regulatory capital, on a consolidated basis,
as calculated in accordance with the applicable Argentine Central Bank
regulations effective at such time, exceeded the minimum capital requirement of
Ps.1,965.1 million by Ps.545 million, representing an excess of 27.73%.

The following table analyzes Grupo Galicia and Banco Galicia's capital resources
as of the dates indicated.

<TABLE>
<CAPTION>
                                                          GRUPO GALICIA                          BANCO GALICIA AS OF
                                                 ---------------------------------      ------------------------------------
                                                         AS OF DECEMBER 31,               DEC. 31,            JUNE 30,
                                                 ---------------------------------      ------------------------------------
                                                     2002         2001       2000          2000          2000         1999
----------------------------------------------------------------------------------------------------------------------------
                                  (In millions of December 31, 2002 constant pesos, except ratios, multiples and percentages)
<S>                                              <C>          <C>          <C>          <C>          <C>          <C>
Shareholders' Equity ..........................  Ps.1,624.5   Ps.3,076.8   Ps.2,885.2   Ps.2,907.7   Ps.2,910.0   Ps.2,644.7
Shareholders' Equity as a Porcentage of
  Total Assets ................................        6.86%       11.13%        7.89%        7.95%        8.28%        8.82%
Total Liabilities as a Multiple of  Total
   Shareholders' Equity........................       13.59x        7.98x       11.68x       11.58x       11.07x       10.33x
Tangible Shareholders' Equity(1) as a
  Percentage of Total Assets...................       5.51%        9.35%        6.88%        6.96%        7.36%        7.84%
Total Capital Ratio............................           -            -            -        15.26        17.34        13.08
Excess Capital over Required Minimum Capital...           -            -            -   Ps.  545.0   Ps.  800.6   Ps.  234.4
Excess Capital over Required Minimum Capital...           -            -            -        27.73%       45.13%       12.66%
Excess Capital over Required Minimum Capital,
   Excluding Convertible Securities............           -            -            -   Ps.  545.0   Ps.  800.6   Ps.  234.4
Excess Capital over Required Minimum Capital,
   Excluding  Convertible Securities...........           -            -            -        27.73%       45.13%       12.66%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Tangible shareholders' equity represents shareholders' equity minus
    intangible assets.

The capital adequacy of Banco Galicia on an unconsolidated basis and
consolidated with its significant subsidiaries, Galicia Uruguay and the five
regional credit card companies that Banco Galicia controls is supervised by the
Argentine Central Bank. The Argentine central Bank's minimum capital requirement
regime was suspended during the whole of 2002. In May 2002, the Argentine
Central Bank has issued a new minimum capital requirement regime, without
specifying the date in which this regime will become effective. See "--Argentine
Banking Regulation--Capital Adequacy Requirements."

As of December 31, 2001, computable regulatory capital, on a consolidated basis,
as calculated in accordance with the applicable Argentine Central Bank
regulations effective at such time, exceeded the minimum capital requirement of
Ps.1,965.1 million by Ps.545 million, representing an excess of 27.73%.

For more information on Banco Galicia capital adequacy see "Item 4. Information
on the Company--Selected Statistical Information -- Regulatory Capital."

                                     -169-

<PAGE>

CAPITAL EXPENDITURES

For a description of Grupo Galicia's and Banco Galicia's capital investments and
capital expenditures in 2002 and our capital commitments for 2003, see "Item 4.
Information on the Company--Capital Investments and Divestitures."

Grupo Galicia made no capital expenditures in fiscal year 2002, and has no
material commitments for capital expenditures for the fiscal year ended December
31, 2003.

Banco Galicia expects to finance its capital expenditures from the cash flows
derived from operations. Banco Galicia has not budgeted material capital
expenditures for 2003.

CRITICAL ACCOUNTING POLICIES

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its audited
consolidated financial statements.

ALLOWANCE FOR LOAN LOSSES

Grupo Galicia's allowance for loan losses is maintained in accordance with the
regulations established by the Argentine Central Bank. Under such regulations, a
minimum allowance for loan losses is calculated primarily based upon the loan
classification of Banco Galicia's commercial loan borrowers and based upon past
due status for Banco Galicia's individual loan borrowers (including commercial
loans less than Ps. 200,000). Although we are required to follow the methodology
and guidelines for determining the loan loss allowance as set forth by the
Argentine Central Bank, we are allowed to provide additional allowances for loan
loss reserve. The determination of the allowance for loan losses requires
significant degrees of judgment.

For commercial loans, we are required to classify all of Banco Galicia's
commercial loan borrowers. In order to perform the classification we must
consider the management and operating history of the borrower, the present and
projected financial situation of the borrower, the borrower's payment history
and ability to service the debt, the capability of the borrower's internal
information and control systems and the risk in the sector in which the borrower
operates. We apply the Argentine Central Bank minimum loss percentages to Banco
Galicia's commercial loan borrowers based on the loan classification and the
nature of the collateral, or guarantee, of the loan. In addition, based on the
overall risk of the portfolio, we consider whether or not additional loan loss
reserves in excess of the minimum required are warranted.

For Banco Galicia's consumer loan portfolio, we classify loans based upon their
past due status consistent with the requirements of the Argentine Central Bank.
Minimum loss percentages required by the Argentine Central Bank are also applied
to the totals in each loan classification.

Even though it is likely that adjustments to Banco Galicia's loan loss reserve
will be necessary in 2003, we do not expect those adjustments to be of the same
magnitude as those effected during 2002.

In addition, we have outstanding significant amounts of loans from the Argentine
government. These loans require no allowance for loan loss reserve under
Argentine Central Bank regulations. Given the current situation in Argentina,
the realization of these loans at their contractual maturities is uncertain.
After the close of the fiscal year, the Argentine government has issued
regulations that establish that the proceeds of these loans are to be used to
repay debt owed to the Argentine Central Bank, thus restructuring this debt into
a liability maturing in 70 or 120 monthly installments. This restructuring of a
financial institution's debt with the Argentine Central Bank is subject to the
Argentine Central Bank having approved the terms and conditions of the
restructuring of the foreign debt of the financial institution, before December
5, 2002.

                                     -170-

<PAGE>

GOVERNMENT SECURITIES AND OTHER ACCOUNTS RECEIVABLE WITH THE GOVERNMENT

Argentine Banking GAAP regarding investments in government securities allows
banks to classify their portfolio of government securities into two balance
sheet categories: trading and investing securities.

GOVERNMENT SECURITIES IN INVESTMENT ACCOUNTS INCLUDING THE BODEN RECEIVED AS
COMPENSATORY BOND

We carry government securities in investment accounts at their cost plus
accretion of discount or amortization of premiums and accrued interest, as
applicable. For government securities previously included in trading accounts,
the cost value is their closing market value as of the day before their transfer
to an investment account.

The Boden received as compensatory bond are classified as "Investing securities"
at par value based upon Argentine Banking GAAP, notwithstanding that the
estimated market value of such bonds is significantly lower than such par value.
At December 31, 2002 such Boden were traded at approximately 44% of par value.

As market conditions change, adjustments to the estimated market value of the
Boden are not reflected in our financial position. Future sales or settlements
of the Boden will reflect the market conditions at the time and may result in a
significant gain or loss that represents the difference between the settlement
amount and the then carrying value.

OTHER ACCOUNTS RECEIVABLE WITH THE GOVERNMENT - COMPENSATORY AND HEDGE BONDS

The right to receive Boden as compensatory and hedge bonds is classified as
"Other Receivables Resulting from Financial Intermediation" and is being
recognized at par value of the Boden to be issued, notwithstanding that the
estimated market value of the bonds linked to such right is significantly below
such carrying value. At December 31, 2002 the BODEN are traded at approximately
44% of par value.

The settlement of the right to receive Boden as compensatory and hedge bonds is
subject to the approval by the Argentine Central Bank and the Argentine
Government (Ministry of Finance). It is reasonably possible that the ultimate of
the Boden and the related commitment to fund the purchase through Argentine
Central Bank borrowings will be materially different from the amounts recorded
at December 31, 2002.

TRADING SECURITIES AND DERIVATIVES

We carry assets and liabilities related to our government and other securities
and derivative trading portfolios at their estimated fair value. Such amounts
are based on either quoted market prices or estimated values derived by the Bank
utilizing dealer quotes. As market conditions change, adjustments to the fair
value of securities and derivatives will be made to reflect those conditions.
Future sales of these securities will reflect the market conditions at the time
and may differ significantly from the estimate fair market value at the balance
sheet date.

GOODWILL

Goodwill is carried at cost less accumulated amortization. The carrying amount
of Goodwill is analyzed for impairment based on estimates of future undiscounted
cash flows generated by the business acquired. Because of the economic
conditions in Argentina and their effect on the estimated cash flows of our
acquired businesses that have goodwill, adjustments for impairment of Goodwill
increased in 2002 and is reasonably possible in the short term.

REPOSSESSED ASSETS AND REAL ESTATE HELD FOR SALE

We carry our other repossessed asset portfolio and real estate held for sale at
the lower of their carrying value or fair market value. Our estimates of fair
market values of such repossessed assets and real estate held for sale consider
outside and internal bank-prepared appraisals. These appraisals are based on
assumptions on market conditions and presume an ability to dispose of the assets
in a reasonable time period. Should our assumptions regarding market conditions
change, we would adjust accordingly our estimates of the fair value of our
repossessed asset portfolio.

                                     -171-

<PAGE>

OTHER RECEIVABLES FROM FINANCIAL BROKERAGE AND MISCELLANEOUS RECEIVABLES

We carry other receivables from financial brokerage and miscellaneous
receivables net of allowances for uncollectable amounts. Our judgment regarding
the ultimate collectability is performed on an account by account basis and
considers our assessment of the borrowers ability to pay based on factors such
as the borrowers financial condition, past payment history, guarantees and past
due status. Under the current situation in Argentina, the settlement of amounts
due from and due to third parties has slowed significantly. Given this
situation, it is likely that we will increase our allowances for some of the
amounts due to us.

EQUITY INVESTMENTS IN OTHER COMPANIES

We carry these investments at the equity method where a significant influence in
the corporate decision making process exists. In other cases the equity
investment is carried at the lower of cost plus dividends or the equity method
value. These balances may be adjusted considering the effects of the new
economic environment on the financial statements of these corporations.

ASSETS UNDER FINANCIAL LEASES

We carry assets under financial leases at cost net of unearned income and the
residual value of the corresponding assets. Allowances for losses are provided
based on the Argentine Central Bank rules applied to commercial or consumer
loans. Under the current situation in Argentina, it is likely that adjustments
on the allowance for lease losses or the residual value of assets under
financial leases will be necessary in the short term.

US GAAP - CRITICAL ACCOUNTING POLICIES

The above critical accounting policies for Argentine Banking GAAP are key
accounting policies on which our financial condition and results of operations
under US GAAP are dependent. Such key accounting policies involve complex
matters or are based on subjective judgments or decisions. Additional
information in connection with certain key accounting policies for US GAAP
purposes follows:

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses represents the estimate of probable losses in the
loan portfolio. Determining the allowance for loan losses requires significant
management judgments and estimates including, among others, identifying impaired
loans, determining the customers' ability to pay and estimating the fair value
of underlying collateral or the expected future cash flows to be received.
Actual events will likely differ from the estimates and assumptions used in
determining the allowance for loan losses. Because of the uncertain economic
situation in Argentina and the effect on Grupo Galicia's customers, it is at
least reasonably possible that additional provisions for loan losses will be
required in the future.

The resolution of the allowance on the outstanding secured loans and other loans
to the Argentine Provinces is subject to the economic and political situation in
Argentina, including the ability of Argentina to repay or refinance its external
debt and its ability to obtain additional liquidity from the International
Monetary Fund or other sources. In addition, the ability of the Group or the
Bank to offset outstanding secured loans against outstanding Argentine Central
Bank debt will affect the carrying amount and the ultimate realization of the
secured loan.

Should secured loans be available to offset debt due to the Argentine Central
Bank or other Argentine national government entities, some or all of the
provisions for loan losses previously recognized may be reversed.

FAIR VALUE ESTIMATES

Quoted market price in active markets is the most reliable measure of fair
value.

During the fiscal year ended December 31, 2001, and as a consequence of Decree
No.1387/01, the Group swapped effective as of November 6, 2001, its Argentine
national government debt instruments, under the Promissory

                                     -172-
<PAGE>

Note/Bond program, for secured loans. An estimate of the fair value of the loans
received was made absent observable quoted market prices for such loans. These
loans are subject to the allowance for loan loss process described above.

In addition, the Bank had offered to exchange its loans to Argentine provincial
governments for secured loans, pursuant to the above mentioned Decree.
Subsequently, pursuant to Decree No.1579/02 of August 28, 2002, the Group
tendered its portofio of loans to Argentine provincial governments for secured
loans issued by the FFDP with different terms and conditions. This swap has not
been completed at the date hereof. The Group has other loans to the Argentine
provincial public sector, that in addition to the aforementioned secured loans
are considered to be impaired under US GAAP in accordance with Statement of
Financial Accounting Standards No.114. Accordingly the Group has established an
allowance for loan losses on loans to the Argentine provinces.

Grupo Galicia carries, for US GAAP purposes, its Compensatory Bonds and its
receivable for Compensatory Bonds at the underlying fair market values of the
Compensatory Bonds (or Compensatory Bonds to be received). These estimated fair
market values are based on quoted market prices (as quoted on the Mercado
Abierto Electr?nico, the Argentine OTC market). These fair market value
quotations are based on relatively low trading volumes and the Group's carrying
value may not be representative of what the Group could dispose of these
securities or receivables at the year end date. Furthermore, it is likely that
the fair market values will fluctuate as economic conditions and other factors
change in Argentina and it is reasonably possible that the realization and
short-term carrying values of these securities will differ significantly from
their carrying value at December 31, 2002.

Grupo Galicia holds retained interests in securitization trusts. Those
investments are carried at estimated fair market value. Determining fair market
values of such investments requires estimating future cash flows and applying a
discount rate to those cash flows. Such estimates do not purport to represent
what those securities could be sold for at the balance sheet date or what those
securities will be settled for. Changes in the values of such securities are
common. The values are affected by the performance of the underlying loans in
the trust and changes in estimated discount rates and other assumptions.
Discount rates are subject to significant fluctuations as affected by, among
other things, the economic and political situation in Argentina. Therefore, it
is reasonably possible that the estimated fair market value of those securities
will change in the near term in amounts that are material to the Group's
financial statements.

IMPAIRMENT OF ASSETS OTHER THAN LOANS

Certain assets, such as goodwill, equity investments, securities available for
sale, and premises and equipment, are subject to an impairment review. Asset
impairment charges require considerable judgment and are recorded when market
value declines below the carrying value is deemed to be an other than temporary
decline, or where the cost of the asset is deemed to not be recoverable. Based
on the economic situation in Argentina, Grupo Galicia's assets may be subject to
further impairment charges in the short term.

DEFERRED TAX ASSET VALUATION ALLOWANCE

Deferred tax assets and liabilities are recorded for the estimated future tax
effects of temporary differences between the carrying amounts of assets and
liabilities recorded for accounting and tax reporting purposes and for the
future tax effects of net operating loss carryforwards. Banco Galicia has a
significant amount of deferred taxes assets at December 31, 2002 and the
carrying amounts of those deferred tax assets are subject to management's
judgment based on available evidence that realization is more likely than not
and they are reduced, if necessary, by a valuation reserve. Based on the
uncertainty with Grupo Galicia's ability to continue as a going concern, a full
valuation reserve on the net deferred tax assets has been recognized at December
31, 2002 and December 31, 2001.

In the event that all or part of our net deferred tax assets in the future
become realizable under US GAAP, an adjustment to our deferred tax assets would
be credited to income tax expense in the period the determination was made.

                                     -173-

<PAGE>

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

OUR BOARD OF DIRECTORS

Grupo Galicia's ordinary shareholders meeting took place on April 23, 2003. The
following table sets out the members of our Board of Directors as of April 23,
2003, all of whom are resident in Buenos Aires, Argentina, the position
currently held by each of them, their principal occupations and when their term
ends.

<TABLE>
<CAPTION>
                                                                             PRINCIPAL               CURRENT
NAME                                             POSITION                    OCCUPATION             TERM ENDS
----                                  -----------------------------      -----------------      -----------------
<S>                                   <C>                                <C>                    <C>
Antonio Garces                        Chairman of the Board and Banker                          April 23, 2005
                                      Chief Executive Officer
Federico Braun                        Vice-Chairman                      Businessman            April 23, 2005
Abel Ayerza                           Director                           Businessman            April 23, 2006
Eduardo J. Zimmermann                 Director                           Businessman            April 23, 2006
Silvestre Vila Moret                  Director                           Businessman            April 23, 2005
Marcelo L.S. Tonini                   Director                           Businessman            April 23, 2006
Pablo Gutierrez                       Alternate Director                 Banker                 April 23, 2006
Pedro Richards                        Alternate Director                 Businessman            April 23, 2006
Maria Ofelia Hordenana de Escasany    Alternate Director                 Businesswoman          April 23, 2005
Luis Sila Monsegur                    Alternate Director                 Accountant             April 23, 2005
Alejandro Maria Rojas Lagarde         Alternate Director                 Attorney               April 23, 2005
Sergio Grinenco                       Alternate Director                 Banker                 April 23, 2006
</TABLE>

Antonio Roberto Garces: Mr. Garces obtained a degree in national public
accounting at the Universidad de Buenos Aires. He has been associated with the
Bank since 1959. Mr. Garces is also the President of Banco Galicia and Gal
Mobiliaria S.A. de Ahorro para Fines Determinados.

Federico Braun: Mr. Braun obtained a degree in industrial engineering at the
School of Engineering of the Universidad de Buenos Aires. He has been associated
with the Bank since 1984 to 2002. Mr. Braun is also President of S.A.
Importadora y Exportadora de la Patagonia, Tanke S.A., Martseb S.A., Campos de
la Patagonia, Batel Forestal S.A., Codigo S.A. Lafont S.A. and Garabi Forestal
S.A.; Vice President of Camara Argentina de Supermercados, Club de Campo "Los
Pinguinos" S.A. and Inmobiliaria y Fiananciera "La Josefina"; Director of
Estancia "Anita" S.A., Consejo Empresario Argentino and a permanent Director of
the Fundacion.

Abel Ayerza: Mr. Ayerza obtained a degree in business administration at the
Universidad Catolica Argentina. He has been associated with the Bank since 1966
to 2002. Mr. Ayerza is also President of Aygalpla S.A. and Second Vice President
of the Fundacion.

Eduardo Jesus Zimmermann: Mr. Zimmermann obtained a degree in banking management
at the Universidad Argentina de la Empresa. He has been associated with the Bank
since 1958 to 2002. Mr. Zimmermann is also a permanent Director of the
Fundacion.

Silvestre Vila Moret: Mr. Vila Moret obtained a degree in Banking Administration
at the Universidad Catolica Argentina. He has been associated with the Bank
since 1995. Mr. Vila Moret is also Vice President of El Benteveo S.A. and a
director of Santa Ofelia S.A. Mr. Vila Moret is the grandson of Maria Ofelia
Hordenana de Escasany.

Marcelo Lorenzo Silvio Tonini: Mr. Tonini obtained a degree in banking
management at the Universidad Argentina de la Empresa. He held a variety of
positions at Banco Galicia since 1963, being a member of the Board of Directors
of the Bank from 1985 to 1998. Currently, Mr. Tonini is President of Maradona
S.A. and a permanent Director of the Fundacion.

Pablo Gutierrez: Mr. Gutierrez obtained a degree in Business Administration from
the Universidad de Buenos Aires. He has been associated with Banco Galicia since
1985 where he serves as the head of the finance executive division. Mr Gutierrez
is also Vice President of Galicia Valores S.A. and Agrogalicia S.A. and acts as
Director of Argenclear S.A.

                                     -174-

<PAGE>

Pedro A. Richards: Mr. Richards obtained a degree in Economics from the
Argentine Catholic University and holds a M.S. in Management from the Sloan
School of Management of the Massachusetts Institute of Technology. He was a
director of the National Development Bank (BANADE). He has been associated with
Banco Galicia since 1990. He was a member of the Board of Directors of Galicia
Capital Markets S.A. between 1992 and 1994. Since August 2000 he is Grupo
Galicia's Managing Director. Mr. Richards is also a Director of Sudamericana
Holding S.A and Vice President of Galicia Warrants S.A. and Net Investment S.A..

Maria Ofelia Hordenana de Escasany: Mrs. Hordenana de Escasany held a variety of
positions at different subsidiaries of Banco Galicia. Currently, she is
President of the Fundacion, Santamera S.A. and Vice President of Santa Ofelia
S.A.

Luis Sila Monsegur: Mr. Monsegur obtained a degree in national public accounting
at the Universidad de Buenos Aires. He has held a variety of positions at Banco
Galicia from 1962 to 1992.

Alejandro Maria Rojas Lagarde: Mr. Rojas Lagarde obtained a degree in law at the
Universidad de Buenos Aires. He held a variety of positions at Banco Galicia
since 1963. He has been responsible for the Legal Counsel Division of Banco
Galicia since 1965 to January, 2000.

Sergio Grinenco: Mr. Grinenco obtained a degree in economics at the Universidad
Catolica Argentina and a master degree in business administration from Babson
College, Wellesley, Massachusetts. He has been associated with the Bank since
1977. Mr. Grinenco is the liquidator of Galicia Equity Analysis S.A. "En
Liquidacion", a Director of Galicia Valores S.A. Sociedad de Bolsa and Galicia
Capital Markets S.A. and Vice President of Banco Galicia.

Our Board of Directors may consist of between three and nine permanent members,
currently it has 6 members. In addition, a number of 6 alternate directors has
been established to act as alternates in the temporary or permanent absence of a
director. The Directors and alternate directors are elected by the shareholders
at their annual general shareholders meeting. Directors and Alternate Directors
can be elected either for a two-year or three year term.

Some of our directors are directors of Banco Galicia. Some of the members of our
Board of Directors may serve on the board of directors of any subsidiary we
establish in the future.

Three of our directors are members of the families that are controlling
shareholders of Grupo Galicia.

COMPENSATION OF DIRECTORS

We do not intend to pay fees to the members of our Board of Directors who are
also members of the Board of Directors of Banco Galicia. Currently, the only
compensation paid to the members of our Board of Directors, who are also members
of the Board of Directors of Banco Galicia, is paid by Banco Galicia for their
services to Banco Galicia. We intend to pay a nominal fee to those members of
our Board of Directors who are not members of the Board of Directors of Banco
Galicia as compensation for their services. Due to the fact that this fiscal
year's results recorded a loss, there was no payment of fees. For a description
of the amounts to be paid to the Board of Directors of Banco Galicia, please see
"--Compensation of Banco Galicia's Directors."

OUR SUPERVISORY COMMITTEE

Our by-laws provide for a supervisory committee consisting of three members who
are called "syndics", and three alternate members who are called "alternate
syndics". In accordance with the Argentine Companies Law and our by-laws, the
syndics and alternate syndics are responsible for ensuring that all of our
actions are in accordance with applicable Argentine law. Syndics and alternate
syndics are elected by the shareholders at the annual general shareholders'
meeting. Unlike directors, syndics and alternate syndics do not have management
functions. Syndics are responsible for, among other things, the preparation of a
report to the shareholders analyzing our financial statements for each year and
the recommendation to the shareholders as to whether to approve such financial
statements. Alternate syndics act as alternates in the temporary or permanent
absence of a syndic. Currently, there are three syndics and three alternate
syndics. Syndics and alternative syndics are elected for a one-year term.

                                     -175-

<PAGE>

The following table shows the members of our supervisory committee. Each of our
syndics was appointed in April 23, 2003 at the Ordinary Shareholders' Meeting.

<TABLE>
<CAPTION>
                                                                               PRINCIPAL             CURRENT
        NAME                                            POSITION              OCCUPATION            TERM ENDS
---------------------                               -----------------     --------------------   ----------------
<S>                                                 <C>                   <C>                    <C>
Adolfo Melian                                       Syndic                Lawyer                 April 23, 2004
Norberto Corizzo                                    Syndic                Public Accountant      April 23, 2004
Luis O. Oddone                                      Syndic                Public Accountant      April 23, 2004
Miguel N. Armando                                   Alternate Syndic      Lawyer                 April 23, 2004
Alejandro H. Massa                                  Alternate Syndic      Public Accountant      April 23, 2004
Miguel C. Maxwell                                   Alternate Syndic      Public Accountant      April 23, 2004
</TABLE>

Adolfo Hector Melian: Mr. Melian obtained a law degree at the Universidad de
Buenos Aires. He has been associated with the Bank since 1970. He has served as
the Board of Director's lawyer of Banco de Galicia until 1975. Mr. Melian is
also Syndic of Banco Galicia and Tarjetas del Mar S.A.

Norberto Daniel Corizzo: Mr. Corizzo obtained a degree in national public
accounting at the Universidad de Buenos Aires. He has been associated with the
Bank since the 2002 Annual Shareholder's Meeting. Mr. Corizzo is also Syndic of
Banco Galicia, Tarjetas del Mar S.A. and Sudecor Valores S.A. Sociedad de Bolsa.

Luis Omar Oddone: Mr. Oddone obtained a degree in national public accounting at
the Universidad de Buenos Aires. He has been associated with the Bank since
1974. Mr. Oddone is also the President of La Cigarra S.A., syndic of Net
Investment S.A., B to B Comercial S.A., Tarjetas Regionales S.A, Tarjetas del
Mar S.A., Tarjetas Cuyanas S.A., Tarjeta Comfiar S.A. and Tarjeta Naranja S.A.
and various other Argentine corporations and alternate syndic of Banco Galicia.

Miguel Norberto Armando: Mr. Armando obtained a law degree at the Universidad de
Buenos Aires. He has been associated with the Bank since 1986. Mr. Armando is
also a President of Liberal S.A. and a Vice president of Arnoar S.A.; and an
alternate syndic of Banco Galicia and various other Argentine corporations.

Alejandro H. Massa: Mr. Massa obtained a degree in national public accounting at
the University of Buenos Aires in 1978. Mr. Massa is Tax Partner at Deloitte &
Co. S.R.L. He is a syndic of diverse societies, among others: Iveco Argentina
S.A, Argenfrio S.A., Gal Mobiliaria S.A. de Ahorro para Fines Determinados,
Galicia Capital Markets S.A., Net Investment S.A. and Galicia Warrants S.A.

Miguel C. Maxwell: Mr. Maxwell obtained a degree in national public accounting
at the Universidad de Buenos Aires in 1979. Mr. Maxwell is Audit Partner at
Deloitte & Co. S.R.L. since 1986. He is a syndic of diverse societies, among
others: Cobranzas Regionales S.A., Galicia Factoring y Leasing S.A., Galicia
Retiro Cia. de Seguros S.A., Galicia Warrants S.A., INTA Industria Textil
Argentina S.A., Laboratorios Kirby S.A., Liag Argentina S.A., Molinos Ala S.A.,
Net Investment S.A., Pedro Genta y Cia. S.A., Pilaga S.A., Sudamericana Holding
S.A., Tarjeta Comfiar S.A., and Tarjeta Naranja S.A.

MANAGEMENT OF GRUPO GALICIA

Grupo Galicia's organizational structure consists of a Managing Director, who is
in charge of the General Department and reports to the Board of Directors and of
the Financial and Accounting Department that reports directly to the Managing
Director.

The General Department's main function is the implementation of policies defined
by Grupo Galicia's Board of Directors. This division coordinates the Financial &
Accounting Division and also supervises investor relations' activities.

The Financial & Accounting Department is mainly responsible for the assessment
of current and possible investments, thus suggesting whether to invest or
withdraw the company's positions in different companies or businesses. It also
plans and coordinates the company's administrative services and financial
resources in order to guarantee its proper

                                     -176-

<PAGE>

management. This division is also responsible for meeting requirements set by
several controlling bodies, complying with information requirements and for
internal controls and budgeting.

For the biography of the Group's Managing Director see "--Our Board of
Directors."

BOARD OF DIRECTORS OF BANCO GALICIA

The Ordinary and Extraordinary Shareholders' Meeting held on April 30, 2003
established the size of the Board Directors with six members and four alternate
directors. The Shareholders' Meeting also resolved to amend section 19 of the
Bank's Bylaws, establishing the renewal of the Board of Directors in thirds (or
a fraction not lower than three). In addition, it decided that the first
shareholders' meeting to elect directors after the approval of the
aforementioned amendment, would fix the duration of each of the elected
directors' term. Likewise, it extended the duration of the alternate directors'
terms to three years

The Ordinary and Extraordinary Shareholders' Meeting held on April 30, 2003
favorably voted Messrs. Sergio Grinenco, Enrique M. Garda Olaciregui, Luis. M.
Ribaya and Guillermo J. Pando as Directors in order to replace four vacancies.
In addition, Messrs. Guillermo A. Laje, Eduardo A. Fanciulli, Juan C. Fossatti,
and Daniel M. Nycz were elected alternate directors.

The Shareholders' Meeting also amended section 17 of the by-laws, modifying the
order in which alternate directors shall replace Directors. The order is as
follows: Mr. Guillermo Laje, Mr. Eduardo Fanciulli, Mr. Juan C. Fossatti and Mr.
Daniel Nycz.

The following table sets out the members of the Board of Directors of Banco
Galicia as resolved by the Ordinary and Extraordinary Shareholders' Meeting held
on April 30, 2003.

<TABLE>
<CAPTION>
                                           YEAR OF             PRINCIPAL           CURRENT
             NAME                        APPOINTMENT           POSITION           OCCUPATION         TERM ENDS
-----------------------------            -----------    -----------------------  ------------    -----------------
<S>                                      <C>            <C>                      <C>             <C>
Antonio R. Garces                            2001       Chairman of the Board        Banker      December 31, 2005
                                                        and Chief Executive
                                                        Officer
Sergio Grinenco                              2003       Vice-Chairman and Chief      Banker      December 31, 2005
                                                        Financial Officer
Enrique M. Garda Olaciregui                  2003       Director and Secretary       Banker      December 31, 2004
Daniel A. Llambias                           2001       Director                     Banker      December 31, 2005
Luis M. Ribaya                               2003       Director                     Banker      December 31, 2004
Guillermo J. Pando (*)                       2003       Director                     Banker      December 31, 2004
Guillermo A. Laje                            2003       Alternate Director           Banker      December 31, 2005
Eduardo A. Fanciulli (*)                     2003       Alternate Director           Banker      December 31, 2005
Juan C. Fossatti                             2003       Alternate Director           Banker      December 31, 2005
Daniel M. Nycz (*)                           2003       Alternate Director           Banker      December 31, 2005
</TABLE>

(*) Authorization from the Argentine Central Bank to assume their positions is
pending.

The following are the biographies of the members of the Board of Directors of
the Bank:

Antonio Roberto Garces: Mr. Garces obtained a degree in national public
accounting at the Universidad de Buenos Aires (the "Buenos Aires University").
He has been associated with the Bank since 1959. Mr. Garces is also the
President of Gal Mobiliaria S.A. de Ahorro para Fines Determinados and Grupo
Galicia.

Sergio Grinenco: Mr. Grinenco obtained a degree in economics at the Universidad
Catolica Argentina and a master degree in business administration from Babson
College, Wellesley, Massachusetts. He has been associated with the Bank since
1977. Mr. Grinenco is the liquidator of Galicia Equity Analysis S.A. "En
Liquidacion", a Director of Galicia Valores S.A. Sociedad de Bolsa and Galicia
Capital Markets S.A. and alternate Director of Grupo Galicia.

Enrique M. Garda Olaciregui: Mr. Garda Olaciregui obtained a degree in law at
the Universidad del Salvador, a master degree in finance from Universidad del
CEMA and a master degree in Management Law at the Universidad ConAustral. He has
been associated with the Bank since 1970.

                                     -177-

<PAGE>

Daniel Antonio Llambias: Mr. Llambias obtained a degree in national public
accounting at the Buenos Aires University. He has been associated with the Bank
since 1964. Mr. Llambias is President of Galicia Factoring y Leasing S.A.,
Sudecor Valores S.A., Galicia Capital Markets S.A. and Agro Galicia S.A. He is
also a Director of Gal Mobiliaria S.A. de Ahorro para Fines Determinados and
Galicia Valores S.A. Sociedad de Bolsa.

Luis Maria Ribaya: Mr. Ribaya obtained a law degree from the Buenos Aires
University. He has been associated with the Bank since 1971. Mr. Ribaya is the
President of Argencontrol S.A. and Galicia Valores S.A. Sociedad de Bolsa; Vice
President of Sudecor Valores S.A. and First Vice President of Mercado Abierto
Electronico S.A.; Director of Galicia Capital Markets S.A. and Agro Galicia S.A.

Guillermo Juan Pando: Mr. Pando has been associated with the Bank since 1969. He
is President of Tarjetas Regionales S.A., Galicia Pension Fund Ltd. and Galicia
Warrants S.A., Vice president of Banco de Galicia (Cayman) Ltd. and Gal
Mobiliaria S.A. Sociedad de Ahorro para Fines Determinados, a Director of Agro
Galicia S.A., Freddo S.A., Galicia Capital Markets S.A., Galicia Factoring y
Leasing S.A., Tarjetas del Mar S.A. and Tarjeta Naranja S.A. and a liquidator of
Galicia Equity Analysis S.A. "En Liquidacion."

Guillermo A. Laje: Mr. Laje joined the Bank in September 1997. Prior to such
time, he has been employed at the former Banco Frances del Rio de la Plata since
1983. Mr. Laje is President of Sudamericana Holding S.A., Vice President of
Tarjetas Regionales S.A. and Visa Argentina S.A.and a Director of Banelco S.A.

Eduardo Antonio Fanciulli: Mr. Fanciulli obtained a degree in business
administration from the Universidad de Buenos Aires. He has been associated with
the Bank since 1983. Mr. Fanciulli is a Director of Galicia Capital Markets S.A.
and Galicia Factoring y Leasing S.A.

Juan Carlos Fossatti: Mr. Fossatti obtained a law degree from the Buenos Aires
University, he graduated as Doctor at the Universidad de la Republica de la
Ciudad de Montevideo (Uruguay). He has been associated with the Bank since the
June 6, 2002 Annual Shareholders' Meeting. Mr. Fossatti is also a Director of
Tierras del Bermejo S.A. and Barlocher do Brazil S.A. (Sao Paulo - Brazil).

Daniel Miguel Nycz: Mr. Nycz obtained a degree in public accounting at the
Buenos Aires University. He has been associated with the Bank since 2003. Mr.
Nycz has been President of Accenture S.A. (ex Andersen Consulting) since 1970
till 2002.

The business address of the members of the Board of Directors is Tte. General J.
D. Peron 407, (C1038AAI) Buenos Aires, Argentina.

FUNCTIONS OF THE BOARD OF DIRECTORS OF BANCO GALICIA

The Board of Directors may consist of three to nine permanent members. In
addition, there can be one or more alternate directors who can act during the
temporary or permanent absence of a director. Currently, there are four
alternate directors. At the date hereof, all of the six directors and two of the
four alternate directors were engaged on a full time basis in the day-to-day
operations of the Bank.

The Bank's Board of Directors meets formally twice each week and informally on a
daily basis. Frequently, certain alternate directors are invited to participate,
mainly those who are employees of the Bank. The Board of Directors is
responsible for all of the major decisions, including those relating to credit,
the Bank's securities portfolio, the design of the branch network and entering
into new businesses.

The Bank's Board of Directors, together with members of the Corporate Banking
Division also conducts regular credit reviews of loans that are in amounts
greater than Ps.3.5 million and subject to judicial proceedings. In addition,
the Board of Directors is responsible for reviewing recommendations made by the
Bank's Corporate Credit and Retail Credit Departments regarding the levels of
Banco Galicia's charge-offs and determines the amount of such charge-offs.

                                     -178-

<PAGE>

The Bank's Board of Directors also establishes the Bank's asset and liability
management policies and the trading guidelines for the Finance Division. The
Board of Directors meets on a daily basis with senior managers of the Corporate
Banking Division and the Finance Divisions to discuss the Bank's asset and
liability positions and treasury decisions, and to discuss any changes to
policies in these areas.

Members of the Bank's Board of Directors serve on the following committees:

         The Risk Management Committee: This Committee establishes general
limits (regulatory and internally determined by the Bank), and verifies its
compliance on credit risk, cross border exposure, currency risk, interest-rate,
liquidity, market exposure and securities position, among others. This Committee
meets at least once every two months. Six Directors and the Risk Management
Manager are members of the Risk Management Committee.

         The Credit Committee: This Committee is composed by four Directors, the
Risk Management Manager and the senior executive officers in charge of the
Wholesale Banking Division and the Retail Banking Division. In addition, the
managers in charge of the units to which the different customer accounts are
assigned participate of this Committee. It meets at least twice a week with a
quorum of at least one director. This Committee's function is to analyze level 1
credits (credits of more than Ps.15 million).

         The Financial Risk Policy Committee ("Comision de Posicion
Financiera"): The members of this Committee are six directors, and the managers
of the Retail Banking, the Risk Management and the Treasury Divisions. The
Committee is responsible for analyzing the development of the Bank's business
from a financial point of view, focusing on fund-raising and placement of
assets. This Committee is in charge of the follow-up and control of liquidity
and interest-rate and currency gaps. The committee is responsible for creation
of the Bank's policies related to each of these areas. The Committee meets at
least once every fifteen days.

         The Systems Committee: The Systems Committee is composed of six
directors and the managers of the Retail Banking, the Operations, the
Organization and the System's Divisions. The Committee is in charge of
supervising and approving new systems development plans and budgets. It is also
responsible for supervising systems budget controls and approving the general
design of the Bank's systems This Committee also supervises the quality of the
Bank's systems. The System's Committee meets at least once every three months.

         The Audit Committee: The Audit Committee is composed of two directors
and of the Internal Auditor of the Bank. This Committee reviews the Bank's
financial statements and the respective external auditor's and Supervisory
Syndics Committee's report. It is responsible for supervising the Bank's
internal control procedures, for reviewing the annual working plan of the Bank's
internal and externals auditors, and for considering their observations with
respect to internal control weaknesses and evaluating the corrective actions
taken to normalize the situations raised. The Committee also provides oversight
of the auditing, accounting, financial reporting and internal control functions.
It is also responsible for periodically reviewing compliance with the rules that
establish the independence of the Bank's external auditors. The Committee meets
at least once a month.

         The Committee for the Control and Prevention of Money Laundering (CCP):
The Committee for the Control and Prevention of Money Laundering is responsible
for establishing the institution's general guidelines with respect to the
prevention and control of money laundering, in accordance with applicable rules.
It is composed of three Directors, the Managers of the Risk Management, Treasury
and Operations Divisions and the Bank's Internal Auditor. The Committee is
scheduled to meet at least once every two months. The Committees' primary
responsibility is to provide general objectives and policies to control and
prevent money laundering.

         The Committee for Information Integrity: This Committee was constituted
to comply with the provisions of the Sarbanes-Oxley Act of 2002 of the United
States. The members of this Committee are three Directors (including the Chief
Financial Officer), the Chief Information Officer, the Bank's Internal Auditor
and other officers of the Bank. A representative of the Bank's Supervisory
Syndics' Committee is also a member of this Committee. In addition a member of
the committee that was created with the same purpose at Grupo Galicia attends
meetings of this Committee.

                                     -179-

<PAGE>

BANCO GALICIA'S EXECUTIVE OFFICERS

In May 2003, Banco Galicia implemented a new corporate organizational structure.
The new structure does not include the position of Chief Executive Officer,
which had been created in 2002, whose functions returned to the Board of
Directors.

The following Divisions report to the Board of Directors:

<TABLE>
<CAPTION>
       DIVISION                              MANAGER
---------------------            -----------------------------
<S>                              <C>
Treasury                         Pablo Gutierrez

Wholesale Banking                Daniel Llambias (in charge)

Retail Banking                   Guillermo A. Laje

Operations                       Guillermo Pedro Desimoni

Organization                     Benito Silva

Systems                          Miguel Angel Pena

Human Resources                  Enrique Carlos Behrends
</TABLE>

Treasury: this Division is responsible for planning the use of funds and for
establishing and applying the Bank's funding and liquidity policy within the
parameters established by the Risk Management Division. It also manages the
trading desk, ensuring the correct execution of transactions. The following
areas report to the manager of the Treasury Division: Financial Operations,
Asset Management, Asset and Liability Management, and Relations with Financial
Institutions.

Retail Banking: this Division is responsible for managing the Bank's business
relating to the provision of financial services to individuals, including
consumer credit risk management. The areas reporting to the Retail Banking
Manager are: Private Banking, Consumer Banking, Insurance Division, Traditional
Distribution Channels, Alternative Distribution Channels, Credit Retail,
Marketing and Quality.

Wholesale Banking: this Division is responsible for managing the Bank's business
relating to the provision of financial services to corporate customers,
including commercial credit risk management and relations with correspondent
banks and multilateral credit agencies. The areas reporting to Wholesale Banking
are: Corporate Banking, International, Capital Markets and Wholesale Marketing.

Operations: this Division is responsible for the processing and control of
transactions arising in the Bank's daily operations and for the Bank's
administrative services (purchases, maintenance and management of the Bank's
physical infrastructure, etc.). The following areas report to the Operations'
Manager: Administrative Services, Centralized Operations and Traditional
Channels Operations.

Organization: this Division is responsible for the design of the Bank's
organizational structure and of the different processes and procedures that make
up the Bank's operations. It is also responsible for ensuring the permanent
update of the Bank's processes and procedures and for providing the Bank on an
ongoing basis of an updated internal regulatory framework on this respect.

Systems: this Division is responsible for developing and maintaining the
operational systems of the Bank. It is also responsible for on-going system
upgrading and for their efficiency and quality.

Human Resources: this Division is responsible for the appointment, promotion and
reassignment of senior management. It also establishes and reviews remuneration
and compensation levels for senior management.

In addition, the Internal Auditor, the Chief Financial Officer, the Legal
Counsel, the Risk Management Manager, the Chief Information Officer and the
Institutional Affairs Manager report to the Chairman of the Board and or to the
Vice-Chairman. Mr. Sergio Grinenco is the Chief Financial Officer. Mr. Luis
Alberto Diaz is the Bank's Internal

                                     -180-

<PAGE>

Auditor. Mr. Enrique Mariano Garda Olaciregui is responsible for the Legal
Counsel. Mr. Raul Hector Seoane is the Chief Information Officer. Mr. Eduardo
Antonio Fanciulli is responsible for the Risk Management Division. Mr. Diego
Francisco Videla is responsible for Institutional Affairs.

The following are the biographies of the Bank's senior executive officers
mentioned above not provided in the section "Board of Directors of Banco
Galicia" or "Our Board of Directors."

Raul Hector Seoane: Mr. Seoane obtained a degree in economics at the Buenos
Aires University. He has been associated with the Bank since 1988. Prior to such
time, he had been in charge of the Technical Department at the Argentine Bank's
Association (ADEBA).

Benito Silva: Mr. Silva received a bachelor's degree in Operational Research
from the Argentine Ministry of Defense. He has been associated with the Bank
since 1989. Prior to such time, he was employed with financial institutions
since 1960. Mr. Silva is a Director of Compensadora Electronica S.A. ("Coelsa").

Diego Francisco Videla: Mr. Videla has been associated with the Bank since 1997.
Prior to such time, he acted as advisor in the privatization of the Banco de la
Provincia de Misiones S.A.

BANCO GALICIA'S SUPERVISORY COMMITTEE

Banco Galicia's bylaws provide for a supervisory committee consisting of three
members ("Syndics") and three alternate members ("Alternate Syndics"). Pursuant
to Argentine Law and to the provisions of the Bank's Bylaws, syndics and
alternate syndics are responsible of ensuring that all of Banco Galicia's
actions are in accordance with applicable Argentine law. Unlike directors,
Syndics and alternate syndics do not participate in business management and
cannot have managerial functions of any type. Syndics are responsible for, among
other things, the preparation of a report to the shareholders analyzing the
Bank's financial statements for each year and the recommendation to the
shareholders as to whether to approve such financial statements. Syndics and
alternate syndics are elected at the Ordinary Shareholders' Meeting for a
one-year term and they can be reelected. Syndics are elected at the Ordinary
Shareholders' Meeting for a one-year term. Alternate syndics act as alternates
in the temporary or permanent absence of a syndic.

The following table shows the members of Banco Galicia's Supervisory Committee
as of December 31, 2002. The composition of the Bank's Supervisory Syndics
Committee was ratified by the annual shareholders' meeting held on April 30,
2003.

<TABLE>
<CAPTION>
                                           YEAR OF                              PRINCIPAL            CURRENT
           NAME                          APPOINTMENT             POSITION       OCCUPATION          TERM ENDS
---------------------------              -----------         ----------------   ----------      ------------------
<S>                                      <C>                 <C>                <C>             <C>
Adolfo Hector Melian                     2002                Syndic             Lawyer          December 31, 2003
Norberto Daniel Corizzo                  2002                Syndic             Accountant      December 31, 2003
Ricardo Adolfo Bertoglio                 2002                Syndic             Accountant      December 31, 2003
Fernando Noetinger                       1987                Alternate Syndic   Lawyer          December 31, 2003
Luis O. Oddone                           1973                Alternate Syndic   Accountant      December 31, 2003
Miguel N. Armando                        1986                Alternate Syndic   Lawyer          December 31, 2003
</TABLE>

For the biographies of Messrs. Adolfo Hector Melian, Norberto D. Corizzo, Luis
Omar Oddone and Miguel Norberto Armando, please see "--Our Supervisory
Committee."

Ricardo Adolfo Bertoglio: Mr. Bertoglio obtained a degree in national public
accounting at the Buenos Aires University. He has been associated with the Bank
since the Annual Shareholder's Meeting held on June 6, 2002, designated him as
syndic. Mr. Bertoglio is also President of Plasmer S.A.

Fernando Noetinger: Mr. Noetinger obtained a law degree at the Buenos Aires
University. He has been associated with the Bank since 1987. Mr. Noetinger is
also President of Arnoar S.A. and Hijos de Ybarra S.A.

                                     -181-

<PAGE>

COMPENSATION OF BANCO GALICIA'S DIRECTORS

Those members of the Bank's Board of Directors who perform technical and
administrative functions through their participation on committees receive an
honorarium in accordance with section 25 subsection 2 of the Bank's Bylaws. For
the fiscal year 2002, the Ordinary Shareholders' Meeting held on April 30, 2003,
approved remuneration for the Board of Directors corresponding to technical and
administrative functions for participation in special Committees in the amount
of Ps.1.8 million.

As a result of the financial assistance that the Bank had received from the
Argentine Central Bank, in fiscal year 2002, it was prohibited from paying any
cash dividends or making any distribution on or in respect of its capital stock,
transfer profits abroad, paying fees or any bonuses or variable compensations
tied to the Bank's results, or granting financial assistance to related parties,
for as long as such assistance is outstanding. As a result, no incentive
compensation was paid.

COMPENSATION OF BANCO GALICIA'S OFFICERS

While the compensation of the members of the Board of Directors is established
in the Bank's Bylaws and decided at the shareholders' meetings, it is the Board
of Directors who establishes the policy for compensation of the Bank's
personnel. Compensation for the Bank's managers includes a fixed portion and a
variable portion determined by the Bank's overall results, the performance of
the unit for which the manager is responsible and the manager's individual
performance. The variable compensation was not applicable in fiscal year 2002
and in the six-month period ended December 31, 2001.

The Bank does not maintain an option plan.

On November 4, 1999, the Bank, in its capacity as grantor, entered into a
framework trust agreement with First Trust of New York, in its capacity as
trustee, to implement a bonus program in favor of certain members of the senior
management of the Bank and its controlled or related companies. This program is
to be reviewed from time to time by the Bank's Board of Directors. Its objective
is to favor and foster said staff's productivity and to reward its permanence at
the Bank. The staff included in this program receives Grupo Galicia's shares or
ADSs.

The grantor transfers to each trust pertaining to the program, as fiduciary
property, certain amounts of money to be determined in each case pursuant to its
own criteria, which shall be invested by the trustee in Grupo Galicia's shares
or ADSs. The trustee shall administer such shares or ADSs for the benefit of the
staff appointed as beneficiaries in each trust. The trustee shall hold title to
such shares until the moment on which they shall be given to the beneficiaries
as their full property in accordance with the provisions set forth in each
corresponding trust.

The amount transferred by the grantor to the trustee was US$4 million, which
have been applied to the purchase of 855,442 shares and 189,116 ADSs of Grupo
Galicia.

The Galicia 2004 Trust was established with 855,442 shares and 31,446.60 ADSs of
Grupo Galicia. Moreover, 46 people holding managerial positions at the Bank and
at GCM have been appointed as beneficiaries of such Trust, having been assigned
855,442 shares and 28,046.60 ADSs. The 3,400 ADSs of Grupo Galicia not assigned
to the Trust returned to the grantor. The remaining 157,669.40 ADSs of Grupo
Galicia were assigned to the Galicia 2005 Trust. The Galicia 2004 trust was
terminated on June 15, 2003.

EMPLOYEES

As of December 31, 2002, Grupo Galicia had 6,229 employees, of which 9 were
employed by the holding company, 4,066 by Banco de Galicia y Buenos Aires S.A.,
51 by Galicia Uruguay, and 2,103 by the other companies required to be
consolidated. Grupo Galicia's management considers its relations with its
employees to be very good.

As of December 31, 2002, approximately 8% of Banco Galicia's employees were
affiliated with the national bank union. Banco Galicia has not experienced a
strike by its employees since 1973. There has been no strike or action by such
union in recent history. The Bank considers that the relations with its
employees have developed within

                                     -182-

<PAGE>

normal and satisfactory parameters despite the environment determined by the
Argentine economic situation and, especially, the financial system's situation
during fiscal year 2002.

By virtue of the aforementioned situation, strategies were created and
implemented by the Bank to adapt the personnel structures and costs to the
possibilities presented by the current business scenario. A series of voluntary
working hours reduction, temporary licensing and voluntary retirement plans were
implemented, which, made it possible to overcome the crisis and go through the
transition path until achieving a 31% reduction in Banco Galicia's staff. These
measures led the Bank to participate, during June 2002, in a negotiation round
with the Banking Association (the Argentine banking employees' labor union) at
the Ministry of Labor. As a result of those negotiations, a compulsory
conciliation measure was ordered, which was carried out satisfactorily and with
no effects on the Bank's plans.

During the period under analysis, the Bank maintained, within the existing
possibilities, the staff's learning and training programs, geared towards
increasing such staff's efficiency and proficiency. Even though some high-cost
programs were discontinued, the training activities contemplated in the
"Generacion Galicia" program aimed at branch employees were strengthened.

Due to the above-mentioned circumstances, during the fiscal year under
consideration the variable compensation plans included in the Results
Association Program (Programa de Asociacion a Resultados - PAR) were suspended,
as well as the incorporation of new beneficiaries to the Pre-Retirement Program
previously in force.

Grupo Galicia will continue its current policy of monitoring both wage levels
and labor conditions in the financial industry in order to be competitive. In
addition, Grupo Galicia implements training programs for its employees at all
levels. Grupo Galicia does not maintain any pension, profit sharing or
retirement programs for its employees.

Fundacion Banco de Galicia y Buenos Aires (hereinafter, the "Fundacion") is an
Argentine non-profit organization which provides various services to Banco
Galicia employees. The various activities of the Fundacion include managing the
medical services obtained by Banco Galicia employees and their families,
purchasing school material for the children of Banco Galicia employees and
making donations to hospitals and other charitable causes, including cultural
events. The Fundacion is managed by a management committee, a majority of the
members of which are members of the Board of Directors of Banco Galicia.

SHARE OWNERSHIP

For information on the share ownership of our directors and executive officers
as of December 31, 2001, see "Item 7. Major Shareholders and Related Party
Transactions."

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

Our controlling shareholders are members of the Escasany, Ayerza and Braun
families and the Fundacion. The controlling shareholders, directly or
indirectly, currently own 100% of Grupo Galicia's Class A shares, through EBA
Holding as described below, and 30.3% of Grupo Galicia's Class B shares, as more
fully set forth in the tables below.

Based on information that is publicly available to us, the table below sets
forth, as of December 31, 2002, the number of Grupo Galicia's Class B shares
held by holders of more than 5% of the Class B shares and the percentage of
Class B shares held by such holder, and the percentage of votes that such Class
B shares represent as a percentage of the total capital stock of Grupo Galicia.

                                     -183-

<PAGE>

<TABLE>
<CAPTION>
                 NAME                              CLASS B SHARES               % OF CLASS B       % OF TOTAL VOTES
                                                                                   SHARES
<S>                                          <C>                                <C>                <C>
Members of the Families(1)                   245,449,670 Class B shares             30.3                   11.7
The Bank of New York(2)                      303,665,440 Class B shares             37.4                   13.7
Banco Santander Central Hispano(3)           82,741,540 Class B shares              10.2                    3.7
All directors and executive officers as      41,387,806 Class B shares               5.1                    1.9
a group (5 persons)(4)
</TABLE>

(1)    No single individual who is a member of the Families owns more than 2.0%
       of our total capital stock. The table below sets forth holders who own
       more than 5% of Grupo Galicia's total capital stock, that is, the Class A
       shares and the Class B shares. The name, address and country of
       citizenship of each member of the Families that owns more than 5% of
       Grupo Galicia shares is listed in the table below.

(2)    Pursuant to the requirements of Argentine law, all Class B shares
       represented by American Depositary Shares are owned of record by The Bank
       of New York, as Depositary. The address for the Bank of New York is 101
       Barclay Street, 22W, New York 10286, and the country of organization is
       the United States.

(3)    Information is based on a Schedule 13 G filed by Banco Santander Central
       Hispano date February 16, 2001 (Latest available at Edgar's web page as
       of April 30, 2003) However, we have confirmed the mentioned amount with
       our files based on information provided by third party companies. The
       address for Banco Central Hispano is Plaza de Canalejas 28014, Madrid,
       Spain, and the country of organization is the Kingdom of Spain.

(4)    Grupo Galicia and Banco Galicia directors and executive officers.

Based on information that is publicly available, the table below sets forth, as
of December 31, 2002, the number of our total capital stock, that is the Class A
shares and Class B shares, held by holders of more than 5% of our total capital
stock, their percentage ownership of our total capital stock and the percentage
of votes of our total capital stock.

<TABLE>
<CAPTION>
                NAME                                   TOTAL SHARES                 % OF TOTAL      % OF TOTAL VOTES
                                                                                      CAPITAL
<S>                                             <C>                                 <C>             <C>
MEMBERS OF THE FAMILIES:
     EBA Holding S.A.                           281,221,650 Class A shares            25.7%              63.4%
     Eduardo Jose Escasany                      20,947,950 Class B shares              1.9(2)             0.9(3)
     Maria Ofelia Escasany                      14,558,847 Class B shares              1.3(2)             0.7(3)
     Maria Teresa Ayerza                             0 Class B shares                    0(2)               0(3)
     Adela M. Ayerza de Gutierrez                    0 Class B shares                    0(2)               0(3)
     Abel Ayerza                                     0 Class B shares                    0(2)               0(3)
OTHERS:
     The Bank of New York(1)                    303,665,440 Class B shares            27.8               13.7
     Banco Santander Central Hispano            82,741,540 Class B shares              7.6                3.7
</TABLE>

(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.

(2)    Represents such holder's percentage ownership in the Class B shares. Such
       holder's ownership interest in Grupo Galicia represented directly by its
       Class B shares, together with its indirect ownership interest in the
       Class A shares, is as follows: Eduardo Jose Escasany 5.9%, Maria Ofelia
       Escasany 4.1%, Maria Teresa Ayerza 2.1%, Adela Maria Ayerza de Gutierrez
       2.1%, Abel Ayerza 2.1%, and the Fundacion 2.0%.

(3)    Represents such holder's voting percentage held directly through its
       Class B shares. Such holder's voting interest in Grupo Galicia
       represented directly by its Class B shares, together with its indirect
       ownership interest in the Class A shares, is as follows: Eduardo Jose
       Escasany 10.6%, Maria Ofelia Escasany 7.4%, Maria Teresa Ayerza 5.2%,
       Adela Maria Ayerza de Gutierrez 5.2%, Abel Ayerza 5.2%, and the Fundacion
       5.0%.

Members of the three families have historically owned the majority of the issued
share capital of Banco Galicia since 1959. Members of the Escasany family have
been on the Board of Directors of Banco Galicia since 1923. The Ayerza and Braun
families have been represented on the Board of Directors of Banco Galicia since
1943 and 1947, respectively. Currently, one member of each family is on our
Board of Directors.

                                     -184-

<PAGE>

On September 13, 1999, the controlling shareholders of Banco Galicia formed EBA
Holding S.A., an Argentine corporation, which is 100% owned by our controlling
shareholders. EBA Holding holds 100% of our Class A shares. EBA Holding's
capital structure consists of Class A shares, each of which is entitled to 5
votes, and Class B shares, each of which is entitled to 1 vote. Currently, EBA
Holding only has Class A shares outstanding. EBA Holding's by-laws currently
provide for certain restrictions on the sale or transfer of its Class A shares.
While the Class A shares of EBA Holding may be transferred to any other Class A
shareholder of EBA Holding, any transfer of such Class A shares to third parties
would automatically result in the conversion of the sold shares into Class B
shares, having one vote per share, of EBA Holding. In addition, EBA Holding's
by-laws contain rights of first refusal, buy-sell provisions and tag-along
rights.

A public shareholder of Banco Galicia, who indirectly owns in excess of 5% of
the outstanding capital stock of Banco Galicia, has granted a right of first
refusal for the purchase of all or part of its shares to certain of our
controlling shareholders in the event such public shareholder decides to sell
all or part of its Banco Galicia shares.

As of December 31, 2002, Grupo Galicia had 811,185,367 Class B shares
outstanding, of which 309,806,200 Class B shares were evidenced by 30,980,620
ADSs. As of December 31, 2002, Grupo Galicia had 32 identified United States
record shareholders, of which 11 held Grupo Galicia's Class B shares and 21 held
Grupo Galicia's ADSs. Such United States holders, in the aggregate, held roughly
135 million Class B shares of Grupo Galicia, directly or through ADSs,
approximately 12.39% of the total outstanding capital stock of Grupo Galicia.

During the negotiations of the Plan, the controlling shareholders of Grupo
Galicia entered into an agreement with the Argentine Central Bank pursuant to
which the Argentine Central Bank is entitled to cause the sale of certain of the
shares of such controlling shareholders in the parent company.

RELATED PARTY TRANSACTIONS

Grupo Galicia is not party to any transaction with, and has not made any loan
to, any of its directors, key management personnel or other related persons, nor
are there any proposed transactions with such persons.

Effective August 11, 2000, Grupo Galicia signed an agreement with Banco Galicia,
whereby, retroactive to July 1, 2000, it was granted the right to include the
word "Galicia" in its corporate name for an annual fee. Under the same
agreement, conditions were set forth under which companies that are direct or
indirect subsidiaries of Grupo Galicia, or in which it holds a stake, may be
authorized to use the identification or trademarks registered by Banco Galicia.

As of December 31, 2002, an aggregate of Ps.137.1 million in financial
assistance granted by the Bank (defined as equity participations and credit,
including guarantees granted) was outstanding to directors of Grupo Galicia and
Banco Galicia, officers of Grupo Galicia and Banco Galicia, the controlling
shareholders and their affiliated entities. The total amount of such financial
assistance was distributed among 133 individuals and 40 companies, with the
average financial assistance amount being Ps.0.9 million. The largest financial
assistance outstanding as of December 31, 2002 was for Ps.28.9 million and
corresponded to Inversora en Servicios S.A., a holding company that holds
interests in electric power generation and distribution holding companies in
which the Bank holds a minority interest. All of such financial assistance
contained terms that are as favorable to Banco Galicia as those granted to
unaffiliated persons.

The directors of Banco Galicia have been involved in certain credit transactions
with Banco Galicia as permitted by Argentine law. The Argentine Commercial
Companies Law and the Argentine Central Bank's regulations allow directors of a
limited liability company to enter into a transaction with such company if such
transaction follows prevailing market conditions. Additionally, the granting of
credit to persons or entities affiliated with Banco Galicia is subject to the
regulations of the Argentine Central Bank. Such regulations set limits on the
amount of credit that could be extended to affiliates based on, among other
things, a percentage of the Bank's Adjusted Shareholders' Equity. See "Item 4.
Information on the Company--Argentine Banking Regulation--Lending Limits."

Banco Galicia is required by the Argentine Central Bank to present to its Board
of Directors, once a month, a list of the outstanding amount of credit advanced
to directors, which is transcribed in the minute books of the Board of
Directors. The Argentine Central Bank's rules establish that loans to directors,
controlling shareholders, officers

                                     -185-

<PAGE>

and other related entities must be granted on an equal basis with respect to
rates, tenor and guarantees as loans granted to the general public. This
practice was suspended in 2002, given that as a result of the financial
assistance that the Bank had received from the Argentine Central Bank, in fiscal
year 2002, it was prohibited from paying any cash dividends or making any
distribution on or in respect of its capital stock, transfer profits abroad,
paying fees or any bonuses or variable compensations tied to the Bank's results,
or granting financial assistance to related parties, for as long as such
assistance is outstanding.

ITEM 8. FINANCIAL INFORMATION

We have elected to provide the financial information set forth in Item 18
hereof.

LEGAL PROCEEDINGS

GRUPO GALICIA

Theseus S.A. y Lagarcue S.A., two companies controlled by a minority shareholder
of Banco Galicia, have initiated legal proceedings against Banco Galicia and
Grupo Galicia for the purpose of declaring the previously completed share
exchange between Banco Galicia shareholders and the shareholders of Grupo
Galicia null and void. Such proceeding was commenced on March 11, 2003. Pursuant
to Argentine law, in order for such action to prevail, amongst other things, the
plaintiff must prevail in declaring null and void the transaction effected by
each shareholder that exchanged its shares in the exchange offer (approximately
3,172 holders), an outcome that management deems very unlikely. The claim does
not request any monetary damages, although management does not deem the
likelihood of a material monetary claim to be significant.

BANCO GALICIA

Banco Galicia has reserved for claims filed against it. In note 12 to our
audited consolidated financial statements, the captions "Litigation" and "For
severance payments" identify respectively, mostly Banco Galicia's reserves to
cover (1) different types of claims filed against Banco Galicia by customers
(e.g. claims for thefts from safe deposit boxes, the cashing of checks that had
been fraudulently altered, discrepancies related to the deposit and payment
services the Bank renders to its customers, etc.) and (2) estimated amounts
payable under labor related lawsuits filed against Banco Galicia by former
employees.

Additionally, the Bank is subject to court orders mandating the reimbursement of
deposits in connection with the establishment of the so called "corralito" in
December of 2001 and the compulsory conversion into pesos and rescheduling of
bank deposits implemented by the Argentine government at the beginning of 2002.
The amount that the Bank has had to pay to comply with these court orders has
been significant, as disclosed in the Group's December 31, 2002 financial
statements and in other sections of this annual report. See "Item 3. Key
Information--Risk Factors--An increasing number of judgments against financial
institutions, in connection with the "corralon", and the recent decision of the
government to lift the "corralon" may result in further deterioration of the
deposit base."

There are no other claims known to the Bank that could have a material adverse
effect on the Bank or its operations.

As a consequence of the "asymmetric pesification," various customers of Banco
Galicia have instituted legal proceedings against various officers and managers
of Banco Galicia, demanding the repayment in full of their dollar deposits and
claiming malfeasance and misfeasance on the part of such officers and managers
in their compliance with the various laws and regulations mandating the
"asymmetric pesification." Although certain of these cases are pending, no
adverse judgments have been obtained as of the date of this annual report and
management does not consider such claims or the potential outcome thereof to be
material.

                                     -186-

<PAGE>

DIVIDEND POLICY AND DIVIDENDS

GRUPO GALICIA

Dividend Policy. We may only declare and pay dividends out of our retained
earnings representing the profit realized on our operations and investments. The
Argentine Commercial Companies Law and our by-laws state that no profits may be
distributed until prior losses are covered. Dividends paid on our Class A shares
and Class B shares will equal one another on a per share basis.

As required by the Argentine Commercial Companies Law, 5% of our net income is
allocated to a legal reserve until the reserve equals 20% of our outstanding
capital. The payment of cash dividends will not be affected by the legal reserve
as long as such reserve is covered by our subsidiaries' retained earnings.
Dividends may not be paid if the legal reserve has been impaired until it
reaches the required level. The legal reserve is not available for distribution
to shareholders.

As a holding company, dividends or other inter-company transfers of funds from
our subsidiaries are our primary source of funds to pay dividends. As a holding
company, our principal source of cash from which to pay dividends on our Class A
shares and Class B shares is dividends or other intercompany transfers from our
subsidiaries, primarily Banco Galicia. Due to the Argentine crisis described in
this annual report and the impact on our subsidiaries, our ability to distribute
cash dividends to our shareholders has been materially and adversely affected.

Our ability to pay dividends to our shareholders in the future will principally
depend on (1) our net income (on a consolidated basis), (2) availability of cash
and (3) applicable legal requirements. Holders of our ADSs will be entitled to
receive any dividends payable in respect of our underlying Class B shares. We
will pay cash dividends to the depositary in pesos, although we reserve the
right to pay cash dividends in any other currency, including dollars. The
deposit agreement provides that the depositary will convert cash dividends
received by the depositary in pesos to dollars and, after deduction or upon
payment of fees and expenses of the depositary, will make payment to holders of
our ADSs in dollars.

In light of the restrictions on Banco Galicia's ability to make distributions
and the Argentine situation, Grupo Galicia's current policy is to retain its
earnings to pay for its operating expenses and to support the growth of the
Group's business. Accordingly, the Board of Directors of Grupo Galicia does not
plan to pay dividends in the foreseeable future.

Dividends. We did not pay any dividends in fiscal year 2002 since Banco Galicia
did not post any income that could be distributed and since it is prohibited
from paying any cash dividends or making any capital contributions to its
affiliates or subsidiaries for so long as the Argentine Central Bank's financial
assistance is outstanding. Furthermore, Argentine Central Bank Communique "A"
3785 further restricted the distribution of cash dividends by establishing that
the Bank should adjust its earnings to be distributed as cash dividends with the
difference between the market value and the carrying value of the compensatory
and hedge bonds after netting the legal reserve and other reserves established
by the Bank's by-laws.

In addition, cash and deposits we maintained on deposit at Galicia Uruguay that
may have otherwise been available for distribution or to pay our operating
expenses, was restructured and converted into (i) subordinated negotiable
obligations for US$43 million, (ii) negotiable obligations for US$2.5 million
and (iii) a savings account available on demand for US$1.4 million.

Losses before taxes per share and per American depositary share was Ps. 2.5190
and Ps. 25.1904, respectively, for the year ending December 31, 2002. Net losses
per share and per American depositary share reached Ps. 1.3354 and Ps. 13.3539.
As a result of the asymmetric pesification the Group recognized a benefit of Ps.
1.,358,193 in the results of the year. Such benefit decreased the Group's net
losses per share and per American Depositary Shares to Ps.1.3354 and Ps.13.3539.
Each American depositary share represents 10 common shares.

Grupo Galicia did not pay dividends for the fiscal year ended in December 2001.
The last cash dividend Grupo Galicia has received from Banco Galicia was in
October 2001 for Ps. 116.4 million.

                                     -187-

<PAGE>

The following table is based on the annual dividends paid on each Banco Galicia
share (and per American depositary share of Banco Galicia), the income before
taxes per Banco Galicia share (and per American depositary share of Banco
Galicia) and the net income per Banco Galicia share (and per American depositary
share of Banco Galicia) for the years ended June 30, 2000, 1999 and 1998. In
order for this historical Banco Galicia information to be comparable with
dividend information for Grupo Galicia, we have restated all Banco Galicia share
and per share amounts to reflect the effect of the exchange offer by Grupo
Galicia for all of the shares of Banco Galicia. The restatement is based upon
the amount of Grupo Galicia common shares of 1,171,704,540 and 117,170,454 of
American depositary shares (each American depositary share represents 10 common
shares) assuming 100% of Banco Galicia shares were tendered in the exchange
offer.

<TABLE>
<CAPTION>
                                         BANCO GALICIA, YEAR ENDED JUNE 30,                GRUPO GALICIA
                                         ------------------------------------  --------------------------------------
                                                                               SIX MONTHS    YEAR ENDED   YEAR ENDED
                                                                                  ENDED      DECEMBER 31  DECEMBER 31
                                                                               DECEMBER 31   -----------  -----------
                                           1998         1999          2000         2000          2001         2002
                                         ---------    ---------     ---------  -----------   -----------    ---------
<S>                                      <C>          <C>           <C>        <C>           <C>           <C>
Dividends per Share .............        Ps 0.0404    Ps 0.0649     Ps 0.1817    Ps 0.0648       -.-           -.-
Dividends per ADS (1)............           0.4041       0.6488        1.8174       0.6477       -.-           -.-
Income before Taxes
     Basic Earnings per Share ...           0.2501       0.4159        0.4299       0.2844       0.3845       -2.5190
     Basic Earnings per ADS (1)..           2.5012       4.1591        4.2989       2.8452       3.8452      -25.1904
     Diluted Earnings per Share..           0.2501       0.4159        0.4299       0.2844       0.3845       -2.5190
     Diluted Earnings per ADS (1)           2.5012       4.1591        4.2989       2.8452       3.8452      -25.1904
Net Income
     Basic Earnings per Share....           0.2130       0.2807        0.2914       0.1798       0.2403       -1.3354
     Basic Earnings per ADS (1)..           2.1298       2.8070        2.9140       1.7978       2.4029      -13.3539
     Diluted Earnings per Share..           0.2130       0.2807        0.2914       0.1798       0.2403       -1.3354
     Diluted Earnings per ADS (1)           2.1298       2.8070        2.9140       1.7978       2.4029      -13.3539
</TABLE>

(1) The amounts do not reflect charges under the deposit agreement for Banco
Galicia's ADRs.

BANCO GALICIA

Under the Argentine Financial Entities Law and Argentine Central Bank
regulations, financial institutions, such as Banco Galicia, are not permitted to
declare and pay dividends more than once a year and are required to allocate 20%
of their annual net income to a legal reserve. Banco Galicia historically has
paid cash dividends on an annual basis in October after approval by the
shareholders at the annual ordinary shareholders' meeting generally held in
September.

Banco Galicia is prohibited from paying any cash dividends or making any capital
contributions to its affiliates for so long as the Argentine Central Bank's
financial assistance is outstanding. Banco Galicia did not pay dividends in its
fiscal year ended December 31, 2001 or December 31, 2002. Furthermore, Argentine
Central Bank Communique "A" 3785 further restricted the distribution of cash
dividends by establishing that the Bank should adjust its earnings to be
distributed as cash dividends with the difference between the market value and
the carrying value of the compensatory and hedge bonds after netting the legal
reserve and other reserves established by the Bank's by-laws.

SIGNIFICANT CHANGES

No significant changes have occurred since the date of the annual financial
statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

SHARES AND ADSs

Our Class B shares are listed on the Buenos Aires Stock Exchange and the Cordoba
Stock Exchange under the symbol "GGAL." Our ADSs, each representing ten Class B
shares, are listed on the Nasdaq SmallCap Market, under the symbol "GGAL." Our
ADSs have been listed on NASDAQ since July 24, 2000.

                                     -188-

<PAGE>

On July 1, 2002, we received a letter from NASDAQ stating that the price for our
ADSs had closed below the minimum US$1 per share required for continued
inclusion under Marketplace Rule 4450(a)(5) for a specific period of time. In
addition, on July 11, 2003, we received a delisting letter from NASDAQ stating
that due to our failure of filing an audit opinion and US GAAP reconciliation in
our annual report on Form 20-F for the fiscal year ended December 31, 2001
within the prescribed time period. We requested a hearing with the Nasdaq
Listing Qualification Panel requesting an extension to file the necessary
financial information. During the pendency of a decision from the panel, our
symbol was changed to "GGAE".

On August 22, 2002, we requested that our ADRs be transferred to the NASDAQ
SmallCap Market, which operates according to the same regulations and uses the
same electronic market-makers' system as to NASDAQ National Market but does not
require a minimum bid of US$1 for ADRs.

On September 9, 2002, the panel granted our request for an extension, and on
December 10, 2002, after we had filed a revised annual report on Form 20-F, we
decided to keep our listing on the NASDAQ SmallCap Market under the
"GGAL"symbol.

The following tables present for the periods indicated the high, low and
period-end sales prices and the average trading volume of the Grupo Galicia
Class B shares on the Buenos Aires Stock Exchange as reported by the Buenos
Aires Stock Exchange and the high, low and period-end sales price and the
average trading volume of the Grupo Galicia ADSs on the Nasdaq as reported by
the Nasdaq National Market and the Nasdaq Small Cap market. There has been no
trading of the Class B shares on the Cordoba Stock Exchange.

                                     -189-
<PAGE>

                      BUENOS AIRES STOCK EXCHANGE (IN PS.)

<TABLE>
<CAPTION>
                                                                                 AVERAGE DAILY TRADING
                                                                                VOLUME (IN THOUSANDS OF
CALENDAR YEAR                                  HIGH        LOW                      CLASS B SHARES)
-------------                                  ----        ---                      --------------
<S>                                           <C>        <C>                    <C>
2002  ..............................          Ps.0.74    Ps.0.12                       3,040.76

RECENT QUARTERS

2002:

      Third Quarter ......................    Ps.0.30    Ps.0.20                       2,349.95
      Fourth Quarter .....................       0.71       0.30                       5,156.68

MOST RECENT SIX MONTHS

January 2003..............................    Ps.0.84    Ps.0.69                       3,595.98
February 2003.............................       0.82       0.73                       2,612.80
March 2003................................       0.82       0.70                       2,708.55
April 2003................................       0.98       0.76                       3,308.78
May 2003..................................       0.92       0.79                       3,323.53
June 2003.................................       1.36       0.96                       6,061.80
</TABLE>

            NASDAQ NATIONAL MARKET/ NASDAQ SMALL CAP MARKET (IN US$)

<TABLE>
<CAPTION>
                                                                                  AVERAGE DAILY TRADING
                                                                                 VOLUME (IN THOUSANDS OF
CALENDAR YEAR                                  HIGH        LOW                            ADRS)
-------------                                  ----        ---                            ----
<S>                                           <C>        <C>                     <C>
2002......................................    US$3.45    US$0.22                         235.02

RECENT QUARTERS

2002
      Third Quarter.......................    US$0.76    US$0.26                         167.45
      Fourth Quarter......................       2.07       0.70                         161.35

MOST RECENT SIX MONTHS

January 2003..............................    US$2.53    US$2.05                         722.16
February 2003.............................       2.76       2.20                         103.99
March 2003................................       2.90       2.25                         143.40
April 2003................................       3.55       2.51                         271.93
May 2003..................................       3.18       2.74                         230.22
June 2003.................................       4.90       3.35                         504.99
</TABLE>

The following tables present for the periods indicated the high, low and
period-end sales prices and the average trading volume of the Banco Galicia
Class B shares on the Buenos Aires Stock Exchange as reported by the Buenos
Aires Stock Exchange and the high, low and period-end sales price and the
average trading volume of the Banco Galicia ADSs on the Nasdaq National Market
as reported by the Nasdaq National Market. Banco Galicia's ADSs (trading symbol
BGALY) were delisted from the Nasdaq National Market on July 31, 2000. Banco
Galicia Class B shares continue to be listed on the Buenos Aires Stock Exchange.

                                     -190-
<PAGE>

                      BUENOS AIRES STOCK EXCHANGE (IN PS.)

<TABLE>
<CAPTION>
                                                                                 AVERAGE DAILY TRADING
                                                                                VOLUME (IN THOUSANDS OF
CALENDAR YEAR                                  HIGH        LOW                       CLASS B SHARES
-------------                                  ----        ---                       --------------
<S>                                           <C>        <C>                    <C>
1997................................          Ps.5.55    Ps.3.07                         243.68
1998................................             4.88       1.71                         296.70
1999................................             5.36       2.29                         573.38
2000................................             5.57       2.15                         322.61
2001................................             3.11       1.43                          35.34
2002................................             1.60       0.45                           8.18

TWO MOST RECENT FISCAL YEARS

2001
      First Quarter.......................    Ps.3.10    Ps.2.20                          79.65
      Second Quarter......................       3.11       2.49                          36.36
      Third Quarter.......................       2.74       1.67                          18.71
      Fourth Quarter......................       1.72       1.43                           7.77
2002
      First Quarter.......................    Ps.1.60    Ps.0.88                          10.99
      Second Quarter......................       0.90       0.45                           6.05
      Third Quarter.......................       0.45       0.45                          15.38
      Fourth Quarter......................       1.60       0.45                           7.05

MOST RECENT SIX MONTHS

January 2003..............................    Ps.1.90    Ps.1.60                           2.97
February 2003.............................       1.90       1.85                           3.03
March 2003................................       1.90       1.80                           7.08
April 2003................................       2.30       1.90                           2.04
May 2003..................................       2.30       2.09                           1.68
June 2003.................................       2.75       2.10                           4.77
</TABLE>

                         NASDAQ NATIONAL MARKET (IN US$)

<TABLE>
<CAPTION>
                                                                                 AVERAGE DAILY TRADING
                                                                                VOLUME (IN THOUSANDS OF
CALENDAR YEAR                                  HIGH        LOW                       CLASS B SHARES
-------------                                  ----        ---                       --------------
<S>                                          <C>        <C>                     <C>
1996................................         US$16.45   US$11.35                        1,857.25
1997................................            22.96      12.50                        2,657.28
1998................................            20.14       7.14                        3,024.23
1999................................            21.90       9.19                        2,706.15
2000................................            22.44      12.75                        1,889.97
</TABLE>

ARGENTINE SECURITIES MARKET

The principal and oldest exchange for the Argentine securities market is the
Buenos Aires Stock Exchange. Securities listed on the Buenos Aires Stock
Exchange include corporate equities and bonds and government securities. Bonds
listed on the Buenos Aires Stock Exchange may also be listed on the Mercado
Abierto Electronico S.A. (Electronic Open Market) or the Argentine OTC Market.
As a result of an agreement between the Buenos Aires Stock Market and the
Argentine OTC Market, equity securities are traded exclusively on the Buenos
Aires Stock Exchange and debt securities (both public and private) are traded on
both the Argentine OTC Market and the Buenos Aires Stock Exchange.

                                     -191-
<PAGE>

The Buenos Aires Stock Market, which is affiliated with the Buenos Aires Stock
Exchange, is the largest stock market in Argentina. The Buenos Aires Stock
Market is a corporation whose 147 shareholder members are the only individuals
and entities authorized to trade, either as principal or as agent, in the
securities listed on the Buenos Aires Stock Exchange, or the BASE. Trading on
the BASE is conducted by continuous open outcry, or the traditional auction
system, from 11:00 p.m. to 6:00 p.m. each business day of the year. Trading on
the BASE is also conducted through SINAC. SINAC is a computer trading system
that operates debt securities and equity securities from 10:00 a.m. to 6:00 p.m.
SINAC is accessed by brokers directly from workstations located at their
offices. Currently, all transactions relating to listed negotiable obligations
and listed government securities can be effected on SINAC. In addition, a
substantial over-the-counter market exists for private trading in listed debt
securities and, prior to the agreement, equity securities. Such trades are
reported on the Argentine OTC Market, an electronic OTC reporting system.

Although companies may list all of their capital stock on the Buenos Aires Stock
Exchange, in most cases a controlling block is retained by the controlling
shareholders resulting in only a relatively small percentage of most companies'
stock being available for active trading by the public on the Buenos Aires Stock
Exchange. Even though individuals have historically constituted the largest
group of investors in Argentina's equity markets, in recent years banks and
insurance companies have shown an interest in these markets, while Argentine
mutual funds, "fondos comunes de inversion", hereinafter referred to as "mutual
funds", had beneficial ownership of equity securities representing, at December
31, 2002, approximately 0.1% of the market capitalization. In addition,
Argentine pension funds (referred to herein as AFJPs) (first permitted to be
established in August 1994), represent an increasing percentage of the Buenos
Aires Stock Exchange trading activity. At December 31, 2002, AFJPs had an
average participation of approximately 7.2% of the total volume traded. As of
December 31, 2002, although 114 companies had equity securities listed on the
Buenos Aires Stock Exchange, approximately 71.5% of the total trading value of
the Buenos Aires Stock Exchange was represented by the securities of the six
most traded domestic companies. The top 10 companies in terms of trading value
during 2002 represented approximately 82% of the total trading in that market
for such period.

The Cordoba Stock Exchange is another important stock market in Argentina.
Securities listed on the Cordoba Stock Exchange include both corporate equities
and bonds and government securities. Through an agreement with BASE, all of the
securities listed on the BASE are authorized to be listed and subsequently
traded on the Cordoba Stock Exchange. Thus, many transactions that originate on
the Cordoba Stock Exchange relate to companies listed on the BASE and such
trades are subsequently settled in Buenos Aires.

MARKET REGULATIONS

The National Securities Commission (Comision Nacional de Valores, the "CNV")
oversees the regulation of the Argentine securities markets and is responsible
for authorizing public offerings of securities and supervising intermediaries,
public companies and mutual funds. AFJPs and insurance companies are regulated
by separate government agencies while financial institutions are regulated
mainly by the Argentine Central Bank. The Argentine securities markets are
governed generally by Law No. 17,811, as amended, which created the CNV and
regulates stock exchanges, market operations and public offering of securities.

In compliance with the provisions of Law No. 20,643 and the Decrees 659/74 and
2220/80, most debt and equity securities traded on the exchanges and the
Argentine OTC Market must, unless otherwise instructed by the shareholders, be
deposited by the shareholders through over-the-counter dealers and agents in
Caja de Valores S.A., which is a corporation owned by the Buenos Aires Stock
Exchange, the Buenos Aires Stock Market and certain provincial exchanges. Caja
de Valores provides central depository facilities for securities and acts as a
transfer and paying agent in connection therewith. It also handles settlement of
securities transactions carried out by the Buenos Aires Stock Exchange and
operates the computerized exchange information system.

There is a relatively low level of regulation of the market for Argentine
securities and investors' activities in such market, and enforcement of existing
regulatory provisions has been extremely limited. Furthermore, there may be less
publicly available information about Argentine companies than is regularly
published by or about companies in the United States and certain other
countries. However, the CNV has taken steps to strengthen disclosure and
regulatory standards for the Argentine securities market, including the issuance
of regulations prohibiting insider

                                     -192-
<PAGE>

trading and requiring insiders to report on their ownership of securities, with
associated penalties for non-compliance.

In order to offer securities to the public in Argentina, an issuer must meet
certain requirements of the CNV regarding assets, operating history, management
and other matters, and only securities for which an application for a public
offering has been approved by CNV may be listed on the Buenos Aires Stock
Exchange or on the Cordoba Stock Exchange. This approval does not imply any kind
of certification of assurance related to the merits of the quality of the
securities, or the solvency of the issuer. Issuers of listed securities are
required to file unaudited quarterly financial statements and audited annual
financial statements, as well as various other periodic reports, with the CNV
and the Buenos Aires Stock Exchange and the Cordoba Stock Exchange.

ITEM 10. ADDITIONAL INFORMATION

DESCRIPTION OF OUR BY-LAWS

GENERAL

Set forth below is a brief description of certain provisions of Grupo Galicia's
by-laws and Argentine law and regulations with regard to Grupo Galicia's capital
stock. Your rights as a holder of our capital stock are subject to Argentine
corporate law, which may differ from the corporate laws of other jurisdictions.
This description is not purported to be complete and is qualified in its
entirety by reference to Grupo Galicia's by-laws, Argentine law and the rules of
the Buenos Aires Stock Exchange, the Cordoba Stock Exchange as well as the
National Securities Commission (Comision Nacional de Valores, the "CNV"). A copy
of Grupo Galicia's by-laws has been filed with and can be examined at the CNV in
Buenos Aires and the SEC in Washington, D.C.

Grupo Galicia was incorporated on September 14, 1999 as a stock corporation,
sociedad anonima, under the laws of Argentina and registered on September 30,
1999 with the Argentine Superintendency of Companies, or Inspeccion General de
Justicia, under corporate registration. number 14,519 of Book 7, Volume of Stock
Corporations. Our domicile is in Buenos Aires, Argentina. Under our by-laws, the
duration of Grupo Galicia is until June 30, 2100. The duration can be extended
by resolution taken at a general extraordinary shareholders' meeting.

During the last shareholders meeting held on April 23, 2003, the company decided
not to adhere to the "Optional Statutory System for the Mandatory Acquisition of
Shares in a Public Offering" in compliance to Decree 677/01, which states a
regulation obligating to make a pronouncement regarding whether or not the
company adopts the above mentioned regime.

OUTSTANDING CAPITAL STOCK

The total subscribed and paid in share capital of Grupo Galicia as of December
31, 2002 amounted to Ps.1,092,407,017. The outstanding capital stock of Grupo
Galicia consists of Class A ordinary shares and Class B ordinary shares, each
with a par value of Ps.1.00. The following table presents the number of our
shares outstanding as of December 31, 2002, and voting interest that the shares
represent.

<TABLE>
<CAPTION>
                                              AS OF DECEMBER 31, 2002
                                NUMBER                % OF
SHARES                         OF SHARES          CAPITAL STOCK          % OF VOTING RIGHTS
------                         ---------      -----------------------    ------------------
<S>                          <C>              <C>                        <C>
Class A Ordinary Shares        281,221,650             25.74%                  63.42%
Class B Ordinary Shares        811,185,367             74.26%                  36.58%
                             -------------            ------                  ------
Total                        1,092,407,017            100.00%                 100.00%
                             =============            ======                  ======
</TABLE>

No further Class A shares are allowed to be issued.

REGISTRATION AND TRANSFER

The Class B shares are book-entry common shares held through Caja de Valores
S.A. Caja de Valores maintains a stock registry for Grupo Galicia and only those
persons listed in such registry will be recognized as shareholders of

                                     -193-
<PAGE>

Grupo Galicia. Caja de Valores periodically delivers to Grupo Galicia
shareholders a statement of the status of their share accounts.

The Class B shares are transferable on the books of Caja de Valores. Caja de
Valores records all transfers in Grupo Galicia's registry. Within 10 days of
such transfer, Caja de Valores is required to confirm the registration of
transfer with the transferor.

VOTING RIGHTS

Each Class A share is entitled to 5 votes and each Class B share is entitled to
1 vote at shareholders' meetings. However, Class A shares are entitled to only 1
vote in certain matters, such as,

-        a merger or spin-off in which Grupo Galicia is not the surviving
         corporation, unless the acquirer's shares are authorized to be publicly
         offered or listed on any stock exchange;

-        a transformation in Grupo Galicia's legal corporate form;

-        a fundamental change in Grupo Galicia's corporate purpose;

-        a change of Grupo Galicia's domicile to be outside Argentina;

-        a voluntary termination of Grupo Galicia's public offering or listing
         authorization;

-        a continuation of Grupo Galicia following a delisting or a mandatory
         cancellation of its public offering or listing authorization;

-        a total or partial recapitalization of the statutory capital of Grupo
         Galicia following a loss; or

-        the appointment of syndics.

All distinctions between our Class A shares and our Class B shares will be
eliminated upon the occurrence of any of the following change of control events:

-        EBA Holding sells 100% of its Grupo Galicia Class A shares,

-        EBA Holding sells a portion of its Grupo Galicia Class A shares to a
         third person who, when aggregating all Grupo Galicia Class A shares
         with Grupo Galicia 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 thereof, 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.

On June 5, 2000, our Board of Directors passed a resolution to clarify that any
transfer by EBA Holding, including by way of a sale, exchange, gift, assignment
of voting rights, spin-off or merger of EBA Holding, which results in a transfer
of Grupo Galicia to any entity or individual, would trigger a change of control
event. In addition, the Board of Directors clarified that if EBA Holding were to
transfer a portion of its Grupo Galicia Class A shares with 5 votes to a
transferee, all distinctions between our Class A shares and our Class B shares
will be eliminated if, when aggregating the 5 votes to the votes of the other
shares that such transferee may have or acquire in the future, such transferee
acquires more than 50% of all of the outstanding votes of Grupo Galicia.

Our Board of Directors also clarified that when two or more persons act or agree
to act in concert or through entities which are under common control with such
persons, such persons would be treated as one person.

In addition, on July 2001, the limitation on selling Class B shares belonging to
the control group was canceled.

LIMITED LIABILITY OF SHAREHOLDERS

Shareholders are not liable for the company's obligations. Shareholders'
liability is limited to the payment of the shares they subscribe. However,
shareholders who have a conflict of interest with the company and do not abstain
from voting may be held liable for damages to the company. Also, shareholders
who willfully or with negligence voted in favor of a resolution that is
subsequently declared void by a court as contrary to Argentine law or the

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company's by-laws, may be held liable for damages to the company or to other
third parties, including other shareholders resulting from such resolutions.

DIRECTORS

Our by-laws provide that the Board of Directors shall be composed by at least
three and at most nine members, as decided at a general ordinary shareholders'
meeting. To be appointed to our Board of Directors, such person must have been
presented as a candidate by shareholders who represent at least 10% of the
voting rights of Grupo Galicia, at least three business days before the date the
general ordinary shareholders' meeting is to be held.

Directors, as well as alternate directors, remain in office for three years.
Both can be reelected and one third of the members of Board of Directors (or
fraction not lower than three) will be renewed each fiscal year. These two
points have been recently modified by the shareholders meeting held on April 23,
2003. Alternate directors replace directors until the following general ordinary
shareholders' meeting is held, and, if it may be the case, during the length of
their absence. Directors may also be replaced by alternate directors if a
Director will be absent from a Board meeting. The Board of Directors is required
to meet at least once every month and each time any one of the directors or the
syndics should request.

Grupo Galicia's by-laws state that the Board of Directors may decide to appoint
an executive committee and/or a delegate director.

APPOINTMENT OF DIRECTORS AND SYNDICS BY CUMULATIVE VOTING

The Argentine Companies Law provides for the use of cumulative voting to enable
minority shareholders to appoint members of the Board of Directors and syndics.
Upon the completion of certain requirements, shareholders are entitled to
appoint up to one third of the vacancies to be filled on the Board of Directors
by cumulative voting. Each shareholder voting cumulatively has the number of
votes resulting from multiplying the number of votes to which such shareholder
would normally be entitled by the number of vacancies to be filled. Such
shareholder may apportion his votes or cast all such votes for one or a number
of candidates not exceeding one third of the vacancies to be filled.

COMPENSATION OF DIRECTORS

The Argentine Commercial Companies Law and the CNV establish rules regarding the
compensation of the Directors. The maximum amount of aggregate compensation that
the members of the Board of Directors may receive, including salaries and other
compensation for the performance of permanent technical and administrative
services, may not exceed 25.0% of profits of each fiscal year. Said maximum
amount shall be limited to 5.0% when no dividends are distributed to the
shareholders and shall be increased proportionately to the dividend distribution
until the 25.0% limit is reached when all profits are distributed.

The Argentine Commercial Companies Law provides that aggregate Director
compensation may exceed the maximum percentage of adjusted net income in any one
year when the Company's profits are non-existent or too small as to allow
payment of a reasonable compensation to Board members which have been engaged in
technical or administrative services to the Company, provided that such proposal
is described in the notice of the agenda for the ordinary Shareholders' Meeting
and is approved by a majority of Grupo Galicia's shareholders present at such
Shareholders' Meeting.

Besides the legal regulations described above, the by-laws of Grupo Galicia
dictate that the Board members are to be compensated according to the best
practices and national and international market standards to compensate
Directors with similar duties and responsibilities.

SYNDICS

Our by-laws, in accordance with Argentine law, provide for the maintenance of a
Supervisory Committee whose members are three permanent Syndics and three
alternate Syndics. Syndics are elected for a one-year term and may

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be reelected. Alternate Syndics replace permanent Syndics in case of absence.
For the appointment of Syndics, each of our Class A shares and Class B shares
has only one vote. Fees for Syndics are established by the shareholders at the
annual ordinary shareholders' meeting. Their function is to oversee the
management of the Company, to control the legality of the actions of the Board,
to attend all Board of Directors' meetings, to attend the Shareholders'
Meetings, to prepare reports for the shareholders on the financial statements
with their opinion, and to provide information regarding the Company to
shareholders that represent at least 2% of the capital stock. Syndics'
liabilities are joint and several and unlimited for the nonfulfillment of their
duties. They are also jointly and severally liable, together with the members of
the Board of Directors, if the proper fulfillment of their duties as Syndics
would have avoided the damage or the losses caused by the members of the Board.

SHAREHOLDERS' MEETINGS

Shareholders' meetings may be ordinary meetings or extraordinary meetings. An
annual ordinary shareholders' meeting is required to be held in each fiscal year
to consider the matters outlined in Article 234 of the Argentine Commercial
Companies Law, including:

-        approval of Grupo Galicia's 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.

Extraordinary shareholders' meetings may be called at any time to discuss
matters beyond the competence of the ordinary meeting, including but not limited
to amendments to the by-laws, matters related to the liquidation of the Company,
limitation of the shareholders' preemptive rights to subscribe new shares,
issuance of bonds and debentures, transformation of the corporate form, the
merger into another company and spin-offs, early winding-up, change of the
company's domicile to outside Argentina, total or partial repayment of capital
for losses, a substantial change in the corporate purpose set forth in the
by-laws.

Shareholders' meetings may be convened by the Board of Directors or by the
Syndics. A shareholder or group of shareholders holding at least 5.0% in the
aggregate of Grupo Galicia's capital stock may request the Board of Directors or
the Syndics to convene a general shareholders' meeting to discuss the matters
indicated by the shareholder.

Once a meeting has been convened with an agenda, the agenda limits the matters
to be passed-on at such meeting and no other matters may be passed-on.

Additionally, the by-laws provide that any shareholder holding at least 5% in
the aggregate of Grupo Galicia capital stock may present, in writing, to the
Board of Directors, before February 28 of each year, proposals of items to be
included in the agenda at the annual general ordinary shareholders' meeting. The
Board of Directors is not bound to include such items in the agenda.

Class B shares represented by ADSs will be voted or caused to be voted by the
Depositary in accordance with instructions of the holders of such ADSs.

Notice of each shareholders' meeting must be published in the Boletin Oficial
(Official Gazette) of the Republic of Argentina in the city of Buenos Aires, and
in a widely circulated newspaper in the country's territory, at least twenty
days prior to the meeting but not more than forty-five days prior to the date on
which the meeting is to be held. The Board of Directors will determine the
appropriate publication of notices outside Argentina in accordance with the
requirements of the jurisdictions and exchanges on which Grupo Galicia's shares
are traded. In order to attend a meeting and to be listed on the meeting
registry, shareholders must submit evidence of their book-entry share

                                     -196-
<PAGE>

account held at Caja de Valores at least three business days prior to the
scheduled meeting date without counting the meeting day.

The quorum for ordinary meetings consists of a majority of stock entitled to
vote, and resolutions may be adopted by the affirmative vote of 50% plus one
vote (an "absolute majority") of the votes present. If no quorum is present at
the first meeting, a second meeting may be called at which the shareholders
present, whatever their number, shall constitute a quorum. Resolutions are to be
adopted by an absolute majority of the votes present. The second meeting may be
convened to be held one hour later on the same day as the first meeting had been
called for, provided that it is an ordinary shareholders' meeting, or within
thirty days of the date for which the first ordinary meeting was called.

The quorum for extraordinary shareholders' meetings consists of 60% of stock
entitled to vote, and resolutions may be adopted by an absolute majority of the
votes present. If no quorum is present at the first meeting, a second meeting
may be called at which the shareholders present, whatever their number, shall
constitute quorum. Resolutions are to be adopted by an absolute majority of the
votes present. The second meeting has to be convened to be held within thirty
days of the date for which the first extraordinary meeting was called, and the
notice must be published for three days, at least eight before the date of the
second meeting. Some special matters require a favorable vote of the majority of
all the stock holding voting rights, the Class A shares being granted the right
to only 1 vote each. The special matters are described in "Description of our
Capital Stock -- Voting Rights."

DIVIDENDS

Dividends may be lawfully paid and declared only out of out retained earnings
representing the profit realized on our operations and investments reflected in
our annual financial statements according to Argentine GAAP as approved at our
annual general shareholders' meeting. No profits may be distributed until prior
losses are covered. Dividends paid on our Class A shares and Class B shares will
equal one another on a per share basis.

As required by the Argentine Commercial Companies Law, 5% of our net income is
allocated to a legal reserve until the reserve equals 20% of our outstanding
capital. The payment of cash dividends will not be affected by the legal reserve
as long as such reserve is covered by our subsidiaries' retained earnings.
Dividends may not be paid if the legal reserve has been impaired. The legal
reserve is not available for distribution to shareholders.

Our Board of Directors submit to our shareholders for approval at a general
ordinary shareholders' meeting our financial statements for the previous fiscal
year, together with reports prepared by our Supervisory Committee. The
shareholders, upon approving the financial statements, determine the allocation
of Grupo Galicia's net income.

Each of our Class B shares are entitled to receive dividends that we may pay,
corresponding to any earnings we may have during any fiscal year, beginning with
our fiscal year ending December 31, 2000.

The Board of Directors is allowed by law and by the by-laws to decide to pay
anticipated dividends on the basis of a balance sheet especially prepared for
purposes of paying such dividends.

Under CNV regulations and the by-laws, cash dividends must be paid to
shareholders within 30 days of the shareholders' meeting approving the dividend.
Payment of dividends in shares requires authorization from the CNV, the Buenos
Aires Stock Exchange and the Cordoba Stock Exchange, which authorizations must
be requested within 10 business days after the shareholders' meeting approving
the dividend. Grupo Galicia must make distribution of the shares available to
shareholders not later than three months of receiving the authorization from the
CNV.

Shareholders cannot claim the payment of dividends from Grupo Galicia after
three years from the date on which the relevant dividends were made available to
such shareholders.

                                     -197-
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CAPITAL INCREASES AND REDUCTIONS

Grupo Galicia may increase its capital upon resolution of the general ordinary
shareholders' meeting. All capital increases must be reported to the CNV,
published in the Boletin Oficial (Official Gazette) and registered with the
Public Registry of Commerce. Capital reductions may be voluntary or mandatory.
Voluntary reduction of capital must be approved by an extraordinary
shareholders' meeting after the corresponding authorization by the Buenos Aires
Stock Exchange, the Cordoba Stock Exchange and the CNV and may take place only
after notice thereof has been published and creditors are given an opportunity
to obtain payment or guarantees for their claims or attachment. Reduction of
capital is mandatory when losses have exceeded reserves and more than 50% of the
stock capital of the company.

PREEMPTIVE RIGHTS

Under Argentine law it is mandatory that holders of ordinary shares of any given
class have a preemptive right, proportional to the number of shares owned by
each holder, to subscribe shares of capital stock of the same class owned by the
shareholder, or of any other class if the new subscription offer does not
include all the classes of shares. Only in the higher interest of the Company,
in exceptional and restrictive cases, the shareholders at an extraordinary
shareholders' meeting with a special majority may decide to suspend or limit the
shareholders' preemptive rights. Shareholders may waive the preemptive right
only case by case.

In the event of an increase in Grupo Galicia's capital, holders of Class A
shares and Class B shares have a preemptive right to subscribe any issue of
Class B shares in an amount sufficient to maintain the proportion of capital
then held by them. Holders of Class A shares are entitled to subscribe for Class
B shares because no further Class A shares carrying 5 votes each are allowed to
be issued in the future since an Argentine company is prohibited from issuing
stock with multiple voting rights after such company is authorized to make
public offering of securities. Grupo Galicia's by-laws do not grant preemptive
rights to preferred shares.

Pursuant to the Argentine Commercial Companies Law, if authorized by an
extraordinary shareholders' meeting, companies authorized to make public
offering of securities may, simultaneously with the approval of a securities
offering, shorten the period during which such rights may be exercised to not
less than ten days following the time in which notices to the shareholders of
their opportunity to preempt the capital increase are published for three days
in the Boletin Oficial of Argentina and a widely circulated newspaper in
Argentina.

Preemptive rights are exercisable following the last publication of notice of
shareholders' opportunity to exercise preemptive rights in the Official Gazette
and an Argentine newspaper of wide circulation for a period of 30 days, provided
that such period may be reduced to no less than 10 days if so approved by an
extraordinary shareholders' meeting.

Shareholders who have exercised their preemptive rights and indicated their
intention to exercise additional preemptive rights are entitled to additional
preemptive rights ("accretion rights"), on a pro rata basis, with respect to any
unsubscribed shares, in accordance with the terms of the Argentine Commercial
Companies Law. Class B Shares not subscribed by the shareholders by virtue of
their exercise of preemptive or accretion rights may be offered to third
parties.

Holders of ADSs may be restricted in their ability to exercise preemptive rights
if a registration, statement under the Securities Act relating thereto has not
been filed or is not effective or an exemption is not available.

APPRAISAL RIGHTS

Whenever the shareholders of Grupo Galicia approve:

-        a merger or spin-off in which Grupo Galicia is not the surviving
         corporation, unless the acquirer's shares are authorized to be publicly
         offered or listed on any stock exchange,

-        a transformation in Grupo Galicia's legal corporate form,

-        a fundamental change in Grupo Galicia's corporate purpose,

                                     -198-
<PAGE>

-        a change of Grupo Galicia's domicile to be outside Argentina,

-        a voluntary termination of Grupo Galicia's public offering or listing
         authorization,

-        a continuation of Grupo Galicia following a delisting or a mandatory
         cancellation of its public offering or listing authorization, or

-        a total or partial recapitalization of the statutory capital of Grupo
         Galicia following a loss,

any shareholder that voted against such action or did not attend the relevant
meeting may exercise the right to have its shares canceled in exchange for the
book value of its shares, determined on the basis of Grupo Galicia's latest
balance sheet prepared in accordance with Argentine laws and regulations,
provided that such shareholder exercises its appraisal to rights within the
periods set forth below.

There is, however, doubt as to whether holders of ADSs, will be able to exercise
appraisal rights with respect to Class B Shares represented by ADSs.

Appraisal rights must be exercised within 5 days following the adjournment of
the meeting at which the resolution was adopted, in the event that the
dissenting shareholder voted against such resolutions, or within 15 days
following such adjournment if the dissenting shareholder did not attend such
meeting and can prove that he was a shareholder on the date of such meeting. In
the case of merger or spin-off involving an entity authorized to make a public
offering of its shares, appraisal rights may not be exercised if the shares to
be received as a result of such transaction are listed on. any stock exchange.
Appraisal rights are extinguished if the resolution giving rise to such rights
is overturned at another shareholders' meeting held within 75 days of the
meeting at which the resolution was adopted.

Payment on the appraisal rights must be made within one year of the date of the
shareholders' meeting at which the resolution was adopted, except where the
resolution was to delist Grupo Galicia's capital stock, in which case the
payment period is reduced to 60 days from the date of the related resolution.

PREFERRED STOCK

According to the Argentine Commercial Companies Law and our by-laws, an ordinary
shareholders' meeting may approve the issuance of preferred stock. Such
preferred stock may have a fixed dividend, cumulative or not cumulative, with or
without additional participation in Grupo Galicia's profits, as decided by
shareholders at a shareholders' meeting when drawing the conditions of the
issuance. They may also have other preferences, like a preference in the
liquidation of the Company.

The holders of preferred stock shall not be entitled to voting rights.
Notwithstanding the foregoing, in the event that no dividends are paid to such
holders for their preferred stock, and for as long as such dividends are not
paid, the holders of preferred stock shall be entitled to voting rights. Holders
of preferred stock are also entitled to vote on certain special matters, such as
the transformation of the corporate form, the merger into another company and
spin-offs (when Grupo Galicia is not the surviving entity and the surviving
entity is not listed on any stock exchange), early winding-up, a change of Grupo
Galicia's domicile to outside Argentina, total or partial repayment of capital
for losses and a substantial change in the corporate purpose set forth in the
by-laws or in the event the preferred stock is traded on stock exchanges and
such trading is suspended or terminated.

CONFLICTS OF INTEREST

As a protection to minority shareholders, under the Argentine Commercial
Companies Law, a shareholder is required to abstain from voting on any
resolution in which its direct or indirect interests conflict with that of or
are different than that of Grupo Galicia. In the event such shareholder votes on
such resolution, and such resolution would not have been approved without such
shareholder's vote, the resolution may be declared void by a court and such
shareholder may be liable for damages to the company as well as to any third
party, including other shareholders.

                                     -199-
<PAGE>

REDEMPTION OR REPURCHASE

According to Decree No. 677/01, a sociedad anonima may acquire the shares issued
by it, provided that the public offering and listing thereof has been
authorized, subject to the following terms and conditions and those set forth by
the CNV. The CNV has not yet issued its regulations. The above mentioned
conditions are: (a) the shares to be acquired shall be fully paid up; (b) there
shall be a resolution signed by the Board of Directors to such effect; (c) the
acquisition shall be made out of net profits or free or voluntary reserves; (d)
the total amount of shares acquired by the company, including previously
acquired shares, shall not exceed 10% of the capital stock or such lower
percentage determined by the CNV. The shares acquired by the company in excess
of such limit shall be disposed of within the term of 90 days after the date of
the acquisition originating such excess.

The shares acquired by the company shall be disposed of by the company within
the maximum term of three years counted as from the date of acquisition thereof.
Upon disposing of the shares, the company shall make a preemptive offer thereof.
Such an offer will not be obligatory if the shares are used in connection with a
compensation plan or program for the company's employees or if the shares are
distributed among all shareholders pro rata their shareholdings. If shareholders
do no exercise, in whole or in part, their preemptive rights, the sale shall be
made at a stock exchange.

LIQUIDATION

Upon liquidation of Grupo Galicia, one or more liquidators may be appointed to
wind up the company. If no such appointment is made, the Board of Directors
shall act as liquidator. All outstanding common shares will be entitled to
participate equally in any distribution upon liquidation.

In the event of a liquidation, in Argentina as well as in any other country, the
assets of Grupo Galicia shall first be applied to satisfy its debts and
liabilities.

OTHER PROVISIONS

The by-laws are governed by Argentine law and the ownership of any kind of Grupo
Galicia's shares represents acceptance of its by-laws and submission to the
exclusive jurisdiction of the ordinary commercial courts of Buenos Aires for any
claim or dispute related to the company, its shareholders, Directors and members
of the Supervisory Committee.

EXCHANGE CONTROLS

From 1989 to November 30, 2001, there were no foreign exchange controls
preventing or restricting the conversion of pesos into U.S. dollars and
transfers abroad. However, since December 3, 2001, the government introduced
controls over the foreign exchange market and transfers of foreign currency
abroad. Since that date and during most of 2002 the market was heavily
controlled. In late 2002, the government began to gradually lift controls over
the foreign exchange market and capital movements. In May 2003, controls over
the FX market were eliminated to a large extent. See "Item 4. Information on the
Company--Main Regulatory Changes in 2002 and 2003."

As of December 31, 2002, despite a certain easing of the restrictions imposed on
the foreign exchange market, the transfer of funds abroad to effect repayments
of capital of debts of a financial nature by financial institutions continued to
require the previous approval of the Argentine Central Bank, except in the case
of new indebtedness corresponding to transactions executed through the free
foreign exchange market after February 2, 2002 and payment obligations with
international credit agencies (Communiques "A" 3471 and "A" 3668). In May 2003,
this pre-requisite was eliminated for financial institutions without financial
assistance for liquidity reasons from the Argentine Central Bank. In the case of
the Bank, the transfer of funds abroad for the payment of principal of debts of
a financial natures continues to require the previous authorization of the
Argentine Central Bank.

                                     -200-
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TAXATION

The following is a summary of certain U.S. Federal income and Argentine tax
matters that may be relevant with respect to the acquisition, ownership and
disposition of ADSs or Class B Shares. Currently, there is no tax treaty between
the United States and Argentina.

ARGENTINE TAXES

Taxation of Dividends

In general, dividend payments on the ADSs or Ordinary Shares, whether in cash,
property, or stock, are not subject to Argentine withholding tax or other taxes.

There is an exception which introduced a 35% tax on certain dividends approved
by the registrant's shareholders.

The new tax would be applied only to the extent that distributions of dividends
exceeds the taxable income of the company increased by nontaxable dividends
received by the distributing company in prior years and reduced by Argentine
income tax paid by the distributing company.

In this situation the new tax would be imposed as a withholding tax on the
shareholder receiving the dividend. Dividends distributions made in property
(other than cash) will be subject to the same tax rules as cash dividends. Stock
dividends are not subject to Argentine taxation.

Taxation of Capital Gains

Pursuant to Decree No. 2,284 (the "Deregulation Decree"), capital gains derived
by non-resident individuals or foreign companies from the sale, exchange or
other disposition of ADSs or Class B Shares are not currently subject to income
tax.

Only applicable to shares not listed in a stock exchange and beginning January
1, 2001, capital gains from the sale, exchange or other dispositions of shares
not listed in a stock exchange, will be subject to income tax when derived by
individuals domiciled in Argentina.

In addition, in the case of legal entities or permanent organizations
incorporated or domiciled abroad that, pursuant to its by-laws, charters,
documents or the applicable regulatory framework, that have as its principal
activity investing outside of the jurisdiction of their incorporation or
domicile, or are generally restricted from doing business in its country of
incorporation, it will be assumed, without any proof to the contrary being
admitted, that the seller is an individual domiciled in Argentina. Such legal
entities will be subject to income tax imposed as a withholding tax on the
seller receiving the payment (for payments made beginning April 30, 2001) at the
rate of 17,50% (that is, 35% on 50% of the amount of the payment), but the
foreign party may choose instead to pay a tax of 35% on the net gain realized on
the sale. In such situation, the Deregulation Decree will not be applicable.

Transfer Taxes

Pursuant to the Deregulation Decree, the sale or transfer of ADSs or Class B
Shares is not subject to transfer tax.

Tax on Assets

The tax reform in force since 1999 reinstituted a tax on assets on Argentine
companies that will be in effect during 10 years, unless that term is extended
by future legislation.

This tax (officially known as "tax on minimum presumptive income") is similar to
the asset tax that was previously in effect in Argentina from 1990 to 1995. It
applies at a general rate of 1% on a broadly defined asset base encompassing
most of the taxpayer's gross assets at the end of any fiscal year ending after
December 31, 1998.

                                     -201-
<PAGE>

Specifically the Law establishes that banks, other financial institutions and
insurance companies will consider a basis of imposition of 20% of the value of
taxable assets.

A company's asset tax liability for a tax year will be reduced by its income tax
payments, and asset tax payments for a tax year can be carried forward to be
applied against the company's income tax liability in any of the following ten
tax years.

Wealth Tax (Tax on Personal Assets)

Individuals domiciled in Argentina will be subject to a 0.5% annual tax in
respect of assets located in Argentina and abroad for assets not exceeding
Ps.200,000. For assets exceeding Ps.200,000 the tax rate is 0.75%. The tax will
be levied on the difference between the total value of the taxpayer's assets at
each December 31st and a non-taxable threshold of Ps.102,300. Individuals
domiciled abroad will pay the tax only in respect of the assets they hold in
Argentina. In the case of individuals domiciled abroad, the tax will be paid by
the individuals or legal entities domiciled in Argentina which as of December
31st of each year hold the joint ownership, possession, use, enjoyment, deposit,
safekeeping, custody, administration or tenure of the assets located in
Argentina subject to the tax belonging to the individuals domiciled abroad. In
such case the annual non-taxable amount of Ps.102,300 will not be deductible.
When the direct ownership of negotiable bonds, government securities and certain
other investments, except shares issued by companies ruled by Law 19,550
(Commercial Companies Law), corresponds to companies domiciled abroad in
countries that do not enforce registration systems for private securities (with
the exception of insurance companies, open-end investment funds, pension funds
or banks and financial entities with head offices in countries that have adopted
the international banking supervision standards laid down by the Basle Committee
of Banks) or pursuant to its by-laws, charter, documents or the applicable
regulatory framework, has as its principal activity investing out of the
jurisdiction of its organization or domicile, or is generally restricted from
doing business in its country of incorporation, it will be assumed, without any
proof to the contrary being admitted, that those assets belong ultimately to
individuals and therefore the system for paying the tax for such individuals
domiciled abroad is applicable to them. The annual non-taxable amount of
Ps.102,300 will not be deductible and the tax will not have to be paid when it
is less than Ps.256. The regulations for applying these requirements have not
yet been issued. In the case of government securities or bonds the Personal
Assets Tax will be applied at the rate of 1.5%.

There is an exception pursuant to a recent tax reform that was published in the
Official Gazette as Law 25,585 , that went into effect on December 31, 2002.
This tax reform introduced a mechanism to collect the Personal Assets Tax on
shares issued by companies ruled by Law 19,550, which ownership belongs to
individuals domiciled in Argentina or abroad and companies or legal entities
domiciled abroad. In the case of companies or legal entities domiciled abroad,
it will be assumed, without any proof to the contrary being admitted, that those
shares belong ultimately to individuals domiciled abroad.

The tax will be assessed and paid by those companies ruled by Law 19,550 at the
rate of 0.5% on the value of the shares or equity interest. The valuation of the
shares, whether listed or not, must be made according to their proportional
equity value. In such case the annual non-taxable amount of Ps.102.300 will not
be deductible. These companies may eventually seek reimbursement from the direct
owner of its shares in respect of any amounts paid to the Argentine tax
authorities as Personal Assets Tax.

Except as described in the preceding paragraphs, the Argentine Tax authorities
have not implemented any mechanism to collect the Personal Assets Tax from
individuals who are not residents in Argentina and they have not imposed any
obligation on Argentine entities which are issuers of Argentine securities to
collect such tax by withholding or deduction in respect of any payments to be
made on such accounts.

Other Taxes

There are no Argentine federal inheritance, succession or gift taxes applicable
to the ownership, transfer or disposition of ADSs or Class B Shares. There are
no Argentine stamp, issue, registration or similar taxes or duties payable by
holders of ADSs or Class B Shares.

                                     -202-
<PAGE>

Deposit and Withdrawal of Class B Shares in Exchange for ADSs

No Argentine tax is imposed on the deposit or withdrawal of Class B Shares in
exchange for ADSs.

UNITED STATES TAXES

The following summary of U.S. Federal income taxes describes certain U.S.
Federal income tax consequences of the ownership of Class B Shares or ADSs
(which are evidenced by American Depositary Shares, "ADSs"), as such securities
are set forth in the documents or the forms thereof, relating to such securities
as in existence on the date hereof, but it does not purport to address all of
the tax considerations that may be relevant to a decision to purchase, own or
dispose of Class B Shares or ADSs. This summary assumes that the Class B Shares
or ADSs will be held as capital assets and does not address tax consequences to
all categories of investors, some of which (such as dealers or traders in
securities or currencies, real estate investment trusts, regulated investment
companies, grantor trusts, tax-exempt entities, banks, insurance companies,
persons owning (or are deemed to own for U.S. tax purposes) at least 10% or more
(by voting power or value) of the shares of Grupo Galicia, investors whose
functional currency is not the U.S. dollar and persons that will hold the
Ordinary Shares or ADSs as part of a position in a "straddle" or as part of a
"hedging" or "conversion" transaction for U.S. tax purposes) may be subject to
special tax rules.

This summary (i) is based on the tax laws of the United States as in effect on
the date of this annual report and on United States Treasury Regulations in
effect as of the date of this annual report, as well as judicial and
administrative interpretations thereof available on or before such date and (ii)
is based in part on representations of the Depository and the assumption that
each obligation in the Deposit Agreement and any related agreement will be
performed in accordance with its terms. All of the foregoing are subject to
change, which change could apply retroactively and could affect the tax
consequences described below.

The U.S. Treasury Department has expressed concern that depositaries for
American depositary receipts, or other intermediaries between the holders of
shares of an issuer and the issuer, may be taking actions that are inconsistent
with the claiming of U.S. foreign tax credits by U.S. holders of such receipts
or shares. Accordingly, the U.S. foreign tax credit analysis described below
could be affected by future actions that may be taken by the U.S. Treasury
Department.

For purposes of this summary, a "U.S. Holder" is a beneficial owner of Class B
Shares or ADSs who, for U.S. Federal income tax purposes, is (i) a citizen or
resident of the United States, (ii) a corporation or partnership organized in or
under the laws of the United States or any state thereof (including the District
of Columbia), (iii) an estate the income of which is subject to U.S. Federal
income taxation regardless of its source, or (iv) a trust if such trust validly
elects to be treated as a United States person for United States federal income
tax purposes or if (a) a United States court can exercise primary supervision
over its administration and (b) one or more United States persons have the
authority to control all of the substantial decisions of such trust. A "Non-U.S.
Holder" is a beneficial owner of Class B Shares or ADSs other than a U.S.
Holder.

If a partnership (or any other entity treated as a partnership for U.S. federal
income tax purposes) holds Class B Shares or ADSs, the tax treatment of a
partner in such partnership will generally depend on the status of the partner
and the activities of the partnership. Such a partner should consult its tax
advisor as to its tax consequences.

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

In general, for U.S. Federal income tax purposes holders of ADSs will be treated
as the owners of the ADSs evidenced thereby and of the Class B Shares
represented by such ADSs.

                                     -203-
<PAGE>

TAXATION OF CASH DIVIDENDS AND DISTRIBUTION OF STOCK

Subject to the discussion below under "Passive Foreign Investment company
considerations," for U.S. Federal income tax purposes, distributions made with
respect to the Class B Shares, represented by ADSs, before reduction for any
Argentine taxes withheld therefrom, will constitute dividends to the extent of
the registrant's current and accumulated earnings and profits, and will be
included in the gross income of a U.S. Holder as ordinary income. Such dividends
will not be eligible for the dividends received deduction generally allowed to
corporations under the Internal Revenue Code of 1986, as amended (the "Code").
Subject to the discussion below under "Passive Foreign Investment Company
Considerations," if distributions with respect to the Class B Shares exceed the
registrant's current and accumulated earnings and profits, the excess would be
treated first as a tax-free return of capital to the extent of such U.S.
Holder's adjusted tax basis in the ADSs, which represent Class B Shares. Any
amount in excess of the amount of the dividend and the return of capital would
be treated as capital gain. The Company does not maintain calculations of its
earnings and profits under U.S. federal income tax principles. Dividends paid in
pesos will be included in the gross income of a U.S. Holder in an amount equal
to the U.S. dollar value of the pesos on the date of receipt, which, in the case
of ADSs, is the date they are received by the depositary. The amount of any
distribution of property other than cash will be the fair market value of such
property on the date of distribution. Any gains or losses resulting from the
conversion of pesos between the time of the receipt of dividends paid in pesos
and the time the pesos are converted into U.S. dollars will be treated as
ordinary income or loss, as the case may be, of a U.S Holder. Dividends received
by a U.S. Holder with respect to the Class B Shares or ADSs will be treated as
foreign source income, which may be relevant in calculating such holder's
foreign tax credit limitation. Subject to certain conditions and limitations,
Argentine tax withheld on dividends may be deducted from taxable income or
credited against a U.S. Holder's U.S. Federal income tax liability. The
limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For this purpose, dividends generally
will constitute foreign source "passive income" (or in the case of certain
holders, "financial services income") for U.S. foreign tax credit purposes.

Subject to the discussion below under "Backup Withholding and Information
Reporting Requirements," a Non-U.S. Holder generally will not be subject to U.S.
Federal income or withholding tax on dividends received on Class B Shares or
ADSs, unless such income is effectively connected with the conduct by the
Non-U.S. Holder of a trade or business in the United States.

TAXATION OF CAPITAL GAINS

Subject to the discussion below under "Passive Foreign Investment Company
Considerations," U.S. Holders that hold ADSs as capital assets will recognize
capital gain or loss for U.S. Federal income tax purposes upon a sale or
exchange of such ADSs in an amount equal to the difference between such U.S.
Holder's adjusted tax basis in the Class B Shares or ADSs and the amount
realized on their disposition. In the case of a noncorporate U.S. Holder, the
maximum marginal U.S. Federal income tax rate applicable to such gain will be
lower than the maximum marginal federal income tax rate for ordinary income if
the U.S. Holder's holding period for the Class B Shares or ADSs exceeds one year
and will be further reduced if such holding period exceeds five years. Gain or
loss, if any, recognized by a U.S. Holder generally will be treated as United
States source income or loss for U.S. foreign tax credit purposes. Certain
limitations exist on the deductibility of capital losses for U.S. Federal income
tax purposes.

The initial tax basis of the Class B Shares to a U.S. Holder is the U.S. dollar
value of the pesos denominated purchase price determined on the date of
purchase. If the Class B Shares are treated as traded on an "established
securities market," a cash basis U.S. Holder (or, if it elects, an accrual basis
U.S. Holder) will determine the dollar value of the cost of such Class B Shares
by translating the amount paid at the spot rate of exchange on the settlement
date of the purchase.

With respect to the sale or exchange of Class B Shares, the amount realized
generally will be the U.S. dollar value of the payment received determined on
(i) the date of receipt of payment in the case of a cash basis U.S. Holder and
(ii) the date of disposition in the case of an accrual basis U.S. Holder. If the
Class B Shares are treated as traded on an "established securities market," a
cash basis taxpayer (or, if it elects, an accrual basis taxpayer) will determine
the U.S. dollar value of the amount realized by translating the amount received
at the spot rate of exchange on the settlement date of the sale.

                                     -204-
<PAGE>

Subject to the discussion below under "Backup Withholding Tax and Information
Reporting Requirements," a Non-U.S. Holder generally will not be subject to U.S.
Federal income or withholding tax on gain realized on the sale or exchange of
Class B Shares or ADSs unless (i) such gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the United States or
(ii) in the case of gain realized by an individual Non-U.S. Holder, the Non-U.S.
Holder is present in the United States for 183 days or more in the taxable year
of the sale or exchange and certain other conditions are met.

PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS

A Non-United States corporation will be classified as a "passive foreign
investment company", or a PFIC, for U.S. federal income tax purposes in any
taxable year in which, after applying certain look-through rules, either (1) at
least 75 percent of its gross income is "passive income" or (2) at least 50
percent of the average value of its gross assets is attributable to assets that
produce "passive income" or is held for the production of passive income.
Passive income for this purpose generally includes dividends, interest,
royalties, rents and gains from commodities and securities transactions.

Based on certain estimates of its gross income and gross assets and the nature
of its business, the Company believes that it will not be classified as a PFIC
for its current taxable year. The Company's status in future years will depend
on its assets and activities in those years. The Company has no reason to
believe that its assets or activities will change in a manner that would cause
it to be classified as a PFIC. If the Company were a PFIC, a U.S. Holder of
Class B Shares or ADSs generally would be subject to imputed interest charges
and other disadvantageous tax treatment with respect to any gain from the sale
or exchange of, and certain distributions with respect to, the Class B Shares or
ADSs.

If the Company were a PFIC, a U.S. Holder of Class B Shares or ADSs could make a
variety of elections that may alleviate the tax consequences referred to above,
and one of these elections may be made retroactively. However, it is expected
that the conditions necessary for making certain of such elections will not
apply in the case of the Class B Shares or ADSs. U.S. Holders should consult
their own tax advisors regarding the tax consequences that would arise if the
Company were treated as a PFIC.

BACKUP WITHHOLDING AND INFORMATION REPORTING

United States backup withholding tax and information reporting requirements
generally apply to certain payments to certain noncorporate holders of stock.

Information reporting generally will apply to payments of dividends on, and to
proceeds from the sale or redemption of, Class B Shares or ADSs made within the
United States to a holder of Class B Shares or ADSs (other than an "exempt
recipient", including a corporation, a payee that is not a United States person
that provides an appropriate certification and certain other persons).

A payor will be required to withhold backup withholding tax from any payments of
dividends on, or proceeds from the sale or redemption of, Class B Shares or ADSs
within the United States to a holder (other than an exempt recipient such as a
corporation or a payee that is not a United States person and that provides an
appropriate certification) if such Holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with, or establish an
exemption from, such backup withholding tax requirements. The backup withholding
tax rate of 30% will be reduced to 29% for years 2004 and 2005, and 28% for
years 2006 through 2010. In the case of such payments made within the United
States to a foreign simple trust, foreign grantor trust or a foreign partnership
(other than payments to a foreign simple trust, a foreign grantor trust or a
foreign partnership that qualifies as a "withholding foreign trust" or a
"withholding foreign partnership" within the meaning of certain Treasury
Regulations and payments to a foreign simple trust, a foreign grantor trust or a
foreign partnership that are effectively connected with the conduct of a trade
or business in the United States), the beneficiaries of the foreign simple
trust, the persons treated as the owners of the foreign grantor trust or the
partners of the foreign partnership, as the case may be, will be required to
provide the certification discussed above in order to establish an exemption
from backup withholding tax and information reporting requirements. Moreover, a
payor only may rely on a certification provided by a payee that is not a United
States person only if such payor does not have actual knowledge or a reason to
know that any information or certification stated in such certificate is
incorrect.

                                     -205-
<PAGE>

THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL
TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF THE CLASS B SHARES OR ADSS.

MATERIAL CONTRACTS

In connection with the implementation of the Plan, the Bank entered into the
following material contracts in fiscal year 2002:

         --to effect the securitization of certain mortgage, commercial and
         secured loan portfolio, in exchange for cash for a total amount of
         Ps.393 million, through the sale to domestic financial institutions or
         the transfer of loans to trusts that issued notes subscribed by
         domestic financial institutions, the following agreements were entered
         into:

                  Financial Trust Contract, dated April 12, 2002, among the
                  Bank, ABN AMRO Bank, Argentine Branch (the trustee), Banco Rio
                  de la Plata S.A., BankBoston N.A. (Buenos Aires Branch), BBVA
                  Banco Frances S.A., HSBC Bank Argentina S.A., Seguro de
                  Depositos S.A., Banco Macro S.A., Banco Credicoop Cooperativo
                  Limitado, Banca Nazionale del Lavoro S.A., Banco Mariva S.A.,
                  Banco Comafi S.A., Banco Patagonia S.A., Banco Saenz S.A. and
                  Banco de Valores S.A., relating to the sale of certain
                  mortgage loans in exchange for Ps.235 million;

                  Financial Trust Contract, dated April 16, 2002, among the
                  Bank, Banco Provincia de Buenos Aires and BAPRO Mandatos y
                  Negocios S.A., relating to the sale of certain secured loans
                  in exchange for Ps.81 million.

                  Credit Assignment Agreement, dated April 17, 2002, between
                  Banco Itau Buen Ayre S.A. and the Bank relating to the sale
                  certain loans in exchange for Ps.15 million.

                  Credit Assignment Agreement, dated April 12, 2002, between the
                  Bank and Citibank, N.A., Buenos Aires Branch, relating to the
                  sale of certain loans for Ps.42 million.

                  Credit Assignment Agreement dated April 8, 2002, betwen Banco
                  de San Luis S.A. and the Bank, relative to the sale of certain
                  loans in exchange for up to Ps.8 million.

                  Credit Assignment Agreement dated March 27, 2002, betwen Banco
                  de San Luis S.A. and the Bank, relative to the sale of certain
                  portfolio of checks in exchange for up to Ps.12 million.

         --the Loan Agreement, dated March 21, 2002, by and between Seguro de
         Depositos S.A. and the Bank relating to a loan by Sedesa for the US
         dollar amount equivalent to Ps.200 million, with a five-year term and
         an interest rate equal to the 180-day LIBOR rate plus 300 basis points.

         --the Loan Agreement, dated April 30, 2002, between Banco de la Nacion
         Argentina, in its capacity as trustee of the Trust Fund for Assistance
         to Financial Institutions and Insurance Companies Fiduciary Fund for
         the Assistance to Financial Institutions and Insurance Companies and
         the Bank for a loan from the Fund for the US dollar amount equivalent
         to Ps.100 million, with a three-year term and an interest rate
         equivalent to the 180-day LIBOR plus 400 basis points, with a floor of
         8.07%.

DOCUMENTS ON DISPLAY

We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended. In accordance with these requirements, we file reports and
other information with the United States Securities and Exchange Commission (the
"SEC"). These materials, including this annual report and the exhibits thereto,
may be inspected and copied at the Commission's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Additionally, copies of the materials may be obtained from the Public Reference
Room of the Commission at 450 Fifth Street, Washington, D.C. 20549 at prescribed
rates and from the SEC's web site at http://www.sec.gov. The

                                     -206-
<PAGE>

public may obtain information on the operation of the Commission's Public
Reference Room by calling the Commission in the United States at 1-800-SEC-0330.
Material submitted by us can also be inspected at the offices of the Nasdaq
National Market System, 1735 K Street, NW, Washington, DC 20006-1506.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following section summarizes Grupo Galicia's approach to market risk
management as of December 31, 2002. Market risks faced by the Group are those
related to liquidity and the fluctuations in interest rates and in foreign
exchange rates with an impact on the operations of Grupo Galicia's main
operating subsidiary, Banco Galicia. As these risks arise from the normal course
of business of a financial intermediary, Grupo Galicia's policy regarding these
risks is applied at the level of its operating subsidiaries. Grupo Galicia's
other subsidiaries and equity investees also are subject to market risk.
However, the amount of these risks are not significant and have not been
discussed separately.

BANCO GALICIA

At Banco Galicia, the process of establishing the consolidated Bank risk
tolerance and practices is carried out under the direction of the Board of
Directors and the supervision of the Risk Management Committee and the Financial
Risk Policy Committee ("Comite de Posicion Financiera"). The Board of Directors
delegates risk policy definition to these Committees and to the Risk Management
Division, and specific risk supervision and management functions to senior
officers of the Treasury Division (financial risks) and of the Retail and
Wholesale Division (credit risk).

The above mentioned Committees are the most senior corporate forums for
supervising and monitoring risk management practices and compliance. See "Item
6. Directors, Senior Management and Employees--Functions of the Board of
Directors of Banco Galicia."

The Treasury Division is responsible for managing liquidity and market risks.
Until November 2001, it presented to the Financial Risk Policy Committee, on
bimonthly basis, a report containing the information necessary to assess and
control market risk. The worsening of crisis situation in December 2001 altered
the frequency of such presentations, mainly from December 2001 to until the Plan
was successfully implemented. Currently these presentations are made on a weekly
basis.

The review of such information provides Banco Galicia with a view of the
environment in which it operates and of the company's exposure to market risk.
Based on this review the Committee formulates recommendations and actions.
Subsequently, the type of information and the frequency has been subject to the
urgencies dictated by the deepening of the economic and political crisis.

LIQUIDITY RISK

Liquidity risk is discussed in the "Item 5. Operating and Financial Review and
Prospects--Liquidity" and "--Consolidated Liquidity Gaps."

INTEREST RATE RISK

The economic policy implemented by the government in 2002 has meant the
compulsory modification by the government of most of the contracts outstanding
between economic agents, which, among others, has completely modified the
currency of denomination of bank assets and liabilities as of December 31, 2001,
as well as their interest rates and maturity, and has introduced the capital
adjustment by the CER or the CVS indexes of the pesified assets or liabilities.
As a result, it is estimated that financial institutions balance sheets,
including the Bank, currently show interest rate and cash flow mismatches in the
different segments of assets and liabilities created by the economic policy of
the government in 2002. These mismatches are currently, to a large extent,
beyond financial institutions control.

There are three segments of interest-earning assets and interest-bearing
liabilities denominated in pesos: (i) those that accrue a fixed interest rate
and the CER principal adjustment; (ii) those that accrue a fixed interest rate
and are

                                     -207-
<PAGE>

adjusted by the CVS, and (iii) those that accrue a market interest rate only. To
these a foreign currency segment (asset and liabilities denominated in dollars)
must be added.

In the Bank's effort to meet customer needs while achieving medium- and
long-term financial objectives, measurement and control of risk deriving from
interest-rate fluctuations (including principal adjustment by CER of certain of
the Bank's assets and liabilities) play a significant role in overall asset and
liability management.

Interest-rate risk (including the risk derived from the adjustment of principal
by CER of certain of the Bank's assets and liabilities) is the effect on the
Bank's net interest income of the fluctuations of market interest rates and of
the CER variations (linked to the variation of the Consumer Price Index).
Sensitivity to interest rate and CER fluctuations arises in the Bank's normal
course of business as the repricing characteristics of its interest-earning
assets do not necessarily match those of its interest-bearing deposits and other
borrowings.

The Bank monitors the repricing structure of interest-earning assets and
interest-bearing liabilities, using such methods as gap analysis, rate-shock
analysis, net-present-value analysis, gap-duration analysis, and simulation.
Banco Galicia aims to minimize the impact of interest rate changes (including
CER fluctuations) on its net interest income.

Interest-rate and CER gap reports are used basically for measuring risk in the
short term. The repricing structure of assets and liabilities is matched when an
equal amount of assets and liabilities reprice for any given period. Any excess
of assets or liabilities over these matched items results in a gap or mismatch.

As a consequence of the context described in other sections of this annual
report, the Bank's interest-earning assets and interest-bearing liabilities,
taking into account the different segments of interest-earning assets and
interest-bearing liabilities, and the total mismatch in each one of the
segments, was as follows at the close of the fiscal year:

                                     -208-
<PAGE>

<TABLE>
<CAPTION>
                                                                         AS OF DECEMBER 31, 2002
                                                -----------------------------------------------------------------------------------
                                                PAST DUE/       LESS THAN                      5 - 10       OVER 10
                                                 COLLABLE        ONE YEAR     1 - 5 YEARS      YEARS         YEARS         TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
                                                  (in millions of December 31, 2002, constant pesos, except for ratios)
<S>                                             <C>            <C>            <C>            <C>           <C>          <C>
ASSETS
PESOS - ADJUSTABLE BY CER...................              -    PS.   616.2        1,385.5       5,476.4       1,952.1       9,430.2
  Government Securities ....................              -           50.6           50.6             -             -         101.2
  Financial Trusts (Galtrust I and
    Secured Loans)..........................              -            1.5           92.5         236.5         378.2         708.7
  Loans.....................................              -          564.1        1,195.5       5,161.8       1,573.9       8,495.3
  Secured Loans Granted as Guarantees.......              -              -           46.9          78.1             -         125.0
PESOS - ADJUSTABLE BY CVS...................              -           23.7           59.8         198.9          70.5         352.9
  Loans.....................................              -           23.7           59.8          49.8          39.0         172.3
  Financial Trusts (Galtrust II and V -
    Mortgage Trust).........................              -              -              -         149.1          31.5         180.6
PESOS.......................................              -          810.2          135.5         172.6           0.3       1,118.6
  Government Securities.....................              -           38.6              -             -             -          38.6
  Corporate Debt Securities.................              -           28.6           20.8             -             -          49.4
  Financial Trust...........................                          33.0           91.2         150.7             -         274.9
  Loans.....................................              -          622.0           23.5          21.9           0.3         667.7
  Other Credits.............................              -           88.0              -             -             -          88.0
DOLLARS.....................................              -        9,077.5          554.2          13.8             -       9,645.5
  Overnight ................................              -            9.6              -             -             -           9.6
  Government Securities.....................              -        1,242.5          376.0           0.2             -       1,618.7
  Compensatory and Hedge Bonds to be
     Received...............................                       7,037.2              -             -             -       7,037.2
  Corporate Debt Securities.................              -           81.7              -             -             -          81.7
  Loans.....................................              -          684.7          178.2          13.6             -         876.5
  Other Credits.............................              -           21.8              -             -             -          21.8
                                                -----------------------------------------------------------------------------------
TOTAL ASSETS................................              -    PS.10,527.6        2,135.0       5,861.7       2,022.9      20,547.2

LIABILITIES
PESOS - ADJUSTABLE BY CER...................              -          292.1        2,614.9       1,587.0           6.5       4,500.5
  Time Deposits.............................              -          292.1          913.7          45.9             -       1,251.7
  Advance from Argentine Central Bank -
    Hedge Bond..............................              -              -          909.1       1,515.2             -       2,424.3
  Lines of Credit - Domestic Banks..........              -              -              -          25.9           6.5          32.4
  Lines of Credit - Argentine Central Bank                -              -          792.1             -             -         792.1
PESOS.......................................    PS.    36.4        6,243.2            8.9             -             -       6,288.5
  Demand Deposits ..........................              -          454.6              -             -             -         454.6
  Time Deposits.............................              -          733.2              -             -             -         733.2
  Restructured Deposits (Cedros)............              -           12.9            6.2             -             -          19.1
  Negotiable Obligations....................           20.8              -              -             -             -          20.8
  Lines of Credit- Domestic Banks ..........           15.6          134.4            2.7             -             -         152.7
  Lines of credit- Argentine Central Bank                 -        4,789.4              -             -             -       4,789.4
  Other Liabilities.........................              -          118.7              -             -             -         118.7
DOLLARS.....................................        5,105.4        1,062.8        1,764.9       1,157.4             -       9,090.5
  Demand Deposits ..........................          131.5           84.8              -             -             -         216.3
  Time Deposits.............................          178.3          370.2          624.5         553.7             -       1,726.7
  Lines of Credit Domestic .................           46.8          107.4          217.0             -             -         371.2
  Negotiable Obligations....................        1,468.6          418.2          923.4         603.7             -       3,413.9
  Lines of Credit...........................        3,157.2              -              -             -             -       3,157.2
  Other Liabilities ........................          123.0           82.2              -             -             -         205.2
                                                -----------------------------------------------------------------------------------
TOTAL LIABILITIES...........................    PS. 5,141.8    PS. 7,598.1    PS. 4,388.7    PS.2,744.4    PS.    6.5   PS.19,879.5

Asset / Liability Gap.......................       (5,141.8)       2,929.5       (2,253.7)      3,117.3       2,016.4         667.7
Cumulative Gap..............................       (5,141.8)      (2,212.3)      (4,466.0)     (1,348.7)        667.7
Ratio of Cumulative Gap to Cumulative
  Liabilities...............................        (100.00)%       (17.37)%       (26.07)%       (6.79)%        3.36%
Ratio of Cumulative Gap to Total
  Liabilities...............................         (25.86)%       (11.13)%       (22.47)%       (6.78)%        3.36%

Asset / Liability Gap CER...................              -          324.1       (1,229.4)      3,889.4       1,945.6       4,929.7
Asset / Liability Gap CVS...................              -           23.7           59.8         198.9          70.5         352.9
Asset / Liability Gap Interest Rate Pesos...          (36.4)      (5,433.0)         126.6         172.6           0.3      (5,169.9)
Asset / Liability Gap Interest Rate Dollars
  (1).......................................       (5,105.4)       8,014.7       (1,210.7)     (1,143.6)            -         555.0

Other Assets................................                       2,535.3
Other Assets- Dollars.......................                         615.4
Other Liabilities...........................                       1,578.6
Other Liabilities- Dollars..................                         615.3
Total Assets................................              -       13,678.3        2,135.0       5,861.7       2,022.9      23,697.9
Total Liabilities...........................        5,141.8        9,792.0        4,388.7       2,744.4           6.5      22,073.4
Gap.........................................    PS.(5,141.8)   PS. 3,886.3    PS.(2,253.7)   PS.3,117.3    PS.2,016.4   PS. 1,624.5
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes Ps. (128.3) million from net other assets and liabilities.

                                     -209-
<PAGE>

The liquidity crisis of late 2001 and the severity of the crisis that unfolded
in 2002, and the measures taken by the government in 2002, including among
others the devaluation of the currency and the "asymmetric pesification", forced
the Bank to initiate a restructuring process of it foreign debt, substantially
all of which is governed by New York law and is dollar-denominated and payable
at the free exchange rate. Other of the Bank's liabilities with local and
foreign creditors are also currently under renegotiation. In the table above,
the total principal amount of debts in which a payment default has been incurred
and subject to renegotiation are shown in a separate column under the heading
"Past Due/Callable."

Ps.4,789.4 million of the financial assistance from the Argentine Central Bank
received for liquidity support was included as a peso-denominated liability
accruing market interest rates in the "Less than One Year" category, because, as
of the close of the fiscal year, this debt was a 30-day revolving facility
accruing 80% of the 4/5 of the interest rate of the 30-day Lebac or of the
minimum term Lebac auctioned in the market. The remaining Ps.792.1 million
financial assistance from the Argentine Central bank, for the same purposes, is
included in the CER segment and accrues a 3.5% annual interest rate.

The establishment by Decree No.739/03 and Decree No.1262/03 and Comunnique
"A"3941 of a restructuring of the whole Argentine Central Bank liabilities into
liabilities maturing in 70 or 120 months, bearing a 3.5% annual interest rate
and principal adjustment by the CER, modifies the mismatches shown in the table
above.

Other measures of the impact of a change in interest rates and in the CER
adjustment on the Bank can be obtained by measuring the changes in the Bank's
net interest income and in the net portfolio present value and duration.

Rate-shock analysis is another method used to assess short-term exposure to
changes in interest rates and CER adjustments. This enables the Bank to measure
the impact of projected changes in interest rates and CER adjustments on the
Bank's year-one net interest income. The method assumes that interest-rate and
CER-adjustment movements from the levels as of the date at which the information
was prepared, are immediate and of the same magnitude and direction, while the
structure and volume of the Bank's assets and liabilities remains unchanged.

To supplement the interest-rate and CER risk analysis described above, both
net-present-value analysis and gap-duration analysis were used to assess the
Bank's long-term exposure to changes in interest rates and CER adjustments.
Through such analyses, an economic value of the Bank's total financial assets
and liabilities was determined by calculating the net present value and weighted
net duration of the Bank's net portfolio. In these calculations, market values
and/or interest rates when available, are used to discount flows with similar
credit risk, collateral, and maturity. When not available, interest rates
(including the CER adjustment) estimated by the Bank were used. This was the
result of the fact that the situation of the financial markets in Argentina as
of the date of preparation of this information and as of the close of the 2002
fiscal year had not normalized yet, in order to market interest rates to be
available for the different types of exposures in the Bank's balance sheet.

For December 31, 2000, the Bank's net portfolio was broken down into "trading"
and "non trading" portfolios For December 31, 2002 y 2001, this breakdown was
not presented, as the Bank had a very low and not material trading portfolio, as
a result of the Bank's participation in the public-sector debt swap performed in
November 2001 and of the situation of the Argentine financial and securities
markets during 2002.

The tables below measure Banco Galicia's December 31, 2002 net present values of
the Bank's net portfolio for various interest-rate scenarios, as well as the
absolute and percent changes from the net present value of this portfolio
corresponding to the December 31, 2002, interest rate levels. The tables also
show the Bank's year-one net interest income generated for various interest-rate
scenarios, as well as the absolute and percent changes from amounts generated by
the December 31, 2002 interest rate levels. The same is presented as of December
31, 2001, and December 31, 2000.

The following discussion about Banco Galicia's management of interest-rate rate
risk contains forward-looking statements that involve risk and uncertainties.
Actual results could differ from those projected in the forward-looking
statements.

                                      210

<PAGE>

The table below shows that the duration of the Bank's shareholders' equity as of
December 31, 2002, was approximately 320.0. This indicates that a
100-basis-point increase in interest rates would result in a 320% decline in the
NPV of the Bank's shareholders' equity, while a decrease of 100 basis points
would have the opposite effect.

<TABLE>
<CAPTION>
                                                                                  AS OF DECEMBER 31, 2002
                                                        ---------------------------------------------------------------------------
NET PORTFOLIO                                                       NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                     <C>           <C>           <C>          <C>          <C>          <C>
      200 ...........................................   Ps. (526.7)   Ps. (623.8)   (642.20)%    Ps. 199.1    Ps. (69.0)   (25.75)%
      150 ...........................................       (394.7)       (491.9)   (506.37)%        216.4        (51.7)   (19.27)%
      100 ...........................................       (230.0)       (327.1)   (336.75)%        233.7        (34.4)   (12.83)%
      50 ............................................        (66.0)       (163.1)   (167.95)%        251.0        (17.2)    (6.40)%
      Static ........................................         97.1             -          -          268.1            -         -
      -50 ...........................................        247.8         150.7     155.13%         286.3         18.2      6.79%
      -100 ..........................................        397.6         300.5     309.36%         304.5         36.3     13.56%
      -150 ..........................................        549.0         451.8     465.13%         321.5         53.4     19.90%
      -200 ..........................................        869.5         772.4     795.14%         335.1         66.9     24.97%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

<TABLE>
<CAPTION>
                                                                                  AS OF DECEMBER 31, 2001
                                                        ---------------------------------------------------------------------------
NET PORTFOLIO                                                       NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                     <C>           <C>           <C>         <C>          <C>           <C>
      200 ...........................................   Ps.3,076.9    Ps. (401.8)     (11.55)%  Ps.1,333.2   Ps. (100.0)    (6.98)%
      150 ...........................................      3,175.7        (303.0)      (8.71)%     1,358.2        (75.0)    (5.23)%
      100 ...........................................      3,277.6        (201.1)      (5.78)%     1,383.3        (49.9)    (3.48)%
      50 ............................................      3,376.4        (102.3)      (2.94)%     1,408.3        (24.9)    (1.74)%
      Static ........................................      3,478.7             -           -       1,433.2            -         -
      -50 ...........................................      3,584.1         105.4        3.03%      1,458.0         24.8      1.73%
      -100 ..........................................      3,693.3         214.6        6.17%      1,482.6         49.4      3.45%
      -150 ..........................................      3,798.7         320.0        9.20%      1,507.4         74.2      5.18%
      -200 ..........................................      3,908.0         429.3       12.34%      1,532.1         98.9      6.90%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

<TABLE>
<CAPTION>
                                                                                  AS OF DECEMBER 31, 2000
                                                        ---------------------------------------------------------------------------
NET TRADING PORTFOLIO                                               NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                     <C>           <C>           <C>         <C>          <C>           <C>
      200 ...........................................   Ps.  158.8    Ps.   (1.8)      (1.09)%  Ps.   18.3   Ps.    2.2     13.51%
      150 ...........................................        159.2          (1.3)      (0.82)%        17.9          1.7     10.81%
      100 ...........................................        161.4           0.9        0.54%         17.3          1.1      6.76%
      50 ............................................        161.0           0.4        0.27%         16.8          0.7      4.05%
      Static ........................................        160.6             -           -          16.2            -         -
      -50 ...........................................        161.0           0.4        0.27%         15.5         (0.7)    (4.05)%
      -100 ..........................................        161.4           0.9        0.54%         15.1         (1.1)    (6.76)%
      -150 ..........................................        161.9           1.3        0.82%         14.4         (1.7)   (10.81)%
      -200 ..........................................        162.3           1.8        1.09%         14.0         (2.2)   (13.51)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

                                      -211-

<PAGE>

<TABLE>
<CAPTION>
                                                                                    AS OF JUNE 30, 2000
                                                        ---------------------------------------------------------------------------
NET TRADING PORTFOLIO                                               NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                       <C>         <C>           <C>           <C>         <C>          <C>
      200 ...........................................      622.8         (3.3)      (0.52)%        58.3          9.8        20.27%
      150 ...........................................      623.7         (2.4)      (0.38)%        55.9          7.4        15.32%
      100 ...........................................      624.3         (1.8)      (0.28)%        53.5          5.0        10.36%
      50 ............................................      625.2         (0.9)      (0.14)%        50.9          2.4         4.95%
      Static ........................................      626.1                                   48.5
      -50 ...........................................      626.9          0.9        0.14%         46.1         (2.4)       (4.95)%
      -100 ..........................................      627.8          1.8        0.28%         43.5         (5.0)      (10.36)%
      -150 ..........................................      628.7          2.6        0.42%         41.1         (7.4)      (15.32)%
      -200 ..........................................      629.6          3.5        0.56%         38.7         (9.8)      (20.27)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

<TABLE>
<CAPTION>
                                                                                  AS OF DECEMBER 31, 2000
                                                        ---------------------------------------------------------------------------
NET NON TRADING PORTFOLIO                                           NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                     <C>           <C>           <C>         <C>           <C>          <C>
      200 ...........................................   Ps.2,640.4     Ps. 222.7        9.21%   Ps.1,903.5     Ps. 13.8      0.73%
      150 ...........................................      2,584.1         166.3        6.88%      1,899.9         10.2      0.54%
      100 ...........................................      2,528.4         110.7        4.58%      1,896.5          6.8      0.36%
      50 ............................................      2,473.8          56.1        2.32%      1,893.0          3.2      0.17%
      Static ........................................      2,417.7             -           -       1,889.7            -         -
      -50 ...........................................      2,367.7         (50.0)      (2.07)%     1,886.3         (3.4)    (0.18)%
      -100 ..........................................      2,315.9        (101.8)      (4.21)%     1,882.9         (6.8)    (0.36)%
      -150 ..........................................      2,264.9        (152.8)      (6.32)%     1,879.5        (10.2)    (0.54)%
      -200 ..........................................      2,214.9        (202.8)      (8.39)%     1,868.8        (21.0)    (1.11)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

<TABLE>
<CAPTION>
                                                                                    AS OF JUNE 30, 2000
                                                        ---------------------------------------------------------------------------
NET NON TRADING PORTFOLIO                                           NET FAIR VALUE                     NET INTEREST INCOME (1)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       ABSOLUTE                               ABSOLUTE
CHANGE IN INTEREST RATES IN BASIS POINTS (RATE SHOCK)     AMOUNT      VARIATION     % CHANGE      AMOUNT      VARIATION    % CHANGE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     (in millions of December 31, 2002, constant pesos)
<S>                                                       <C>         <C>           <C>          <C>          <C>          <C>
      200 ...........................................     1,788.0       (220.1)     (10.96)%     1,761.6        13.8         0.79%
      150 ...........................................     1,841.3       (166.9)      (8.31)%     1,758.1        10.3         0.59%
      100 ...........................................     1,895.9       (112.3)      (5.59)%     1,754.6         6.8         0.39%
      50 ............................................     1,951.3        (56.8)      (2.83)%     1,751.1         3.3         0.19%
      Static ........................................     2,008.1                                1,747.8
      -50 ...........................................     2,066.0         57.8        2.88%      1,744.4        (3.3)       (0.19)%
      -100 ..........................................     2,125.2        117.1        5.83%      1,741.3        (6.5)       (0.37)%
      -150 ..........................................     2,185.7        177.5        8.84%      1,738.0        (9.8)       (0.56)%
      -200 ..........................................     2,247.5        239.4       11.92%      1,727.5       (20.3)       (1.16)%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Net interest of the first year.

As of December 31, 2002, the duration of the Group's shareholder's equity shows
a significant increase as compared to December 31, 2001. This increase is mainly
attributable to the low duration assigned to liabilities as of December 31,
2002. The low duration of the Group's liabilities as of December 31, 2002,
reflects the following assumptions (i) the financial assistance received from
the Argentine Central Bank for liquidity reasons was considered a 30-day

                                     -212-

<PAGE>

revolving facility, in accordance with the Argentine Central Bank rules
regarding financial assistance received by banks for liquidity reasons and given
that the measures from the government to restructure the assistance received by
banks during the 2001 and 2002 crisis into long term loans were issued after the
close of the fiscal year, and (ii) the aggregate of the Group's debt currently
subject to renegotiation was treated as callable. It should be considered also
that this high duration applies, unlike previous fiscal years, to a low
shareholders' equity NPV, mainly attributable to the Bank's exposure to the
Argentine public sector.

As of December 31, 2001, the shareholders' equity duration shows an increase as
compared to December 31, 2000, mainly due to the extension of the average
maturity of interest-earning assets, which in turn was due to the Bank's
participation in the public-sector debt swap performed in November 2001, where
the Bank tendered all of its position of eligible debt instruments (including
provincial loans) and received secured loans of a longer duration. As of
December 31, 2000, the Bank shows a level of total interest-rate sensitivity
similar than as of June 30, 2000. This reflects the fact that the structure of
the Bank's interest-earning assets remained basically unchanged between the two
dates. At the same time, the duration of interest-bearing liabilities remained
unchanged during the same period.

FOREIGN EXCHANGE RATE RISK

Exchange-rate sensitivity is the relationship between the fluctuations of
exchange rates and the Bank's net financial income resulting from the
revaluation of the Bank's assets and liabilities denominated in
foreign-currency.

Until December 31, 2001, Banco Galicia aimed at minimizing the impact of foreign
exchange rate fluctuations on its financial results by closely matching assets
and liabilities not denominated in pesos, while keeping a net asset position in
foreign currency (Banco Galicia's position in currencies other than dollars has
always been insignificant, therefore in the paragraphs below foreign currency
positions represent mainly US dollar positions).

As of December 31, 2002, the Bank's position in foreign currency was to a large
extent the result of the measures taken by the Government during 2002, mainly
the compulsory "asymmetric pesification" of certain assets and liabilities which
have changed the currency denomination of bank's balance sheets components and
the provision by the Government of compensation for the effects of the former,
through dollar-denominated bonds, in the case of the Bank. As of December 31,
2002, Banco Galicia's net asset foreign currency position (the amount by which
Banco Galicia's foreign currency denominated assets exceeded foreign currency
denominated liabilities) amounted to Ps.555.0 million.

Trading decisions are made by Banco Galicia's Treasury Division to the extent
they fall within pre-established guidelines as to size, spread and maturity.
Approval of the Board of Directors is required if the Bank intends to deviate
from these guidelines.

The following discussion about Banco Galicia's management of exchange rate risk
contains forward-looking statements that involve risk and uncertainties. Actual
results could differ from those projected in the forward-looking statements.

In the analysis presented below, Banco Galicia's December 31, 2000 net asset
foreign currency position is broken down into net "trading assets" and net
"non-trading assets" denominated in foreign currency. The net trading portfolio
includes holdings of marked-to-market government securities and corporate equity
securities denominated in foreign currency. The net non-trading portfolio
includes all other assets denominated in foreign currency comprised in the
Bank's net asset foreign currency position. For December 31, 2002 and December
31, 2001, this breakdown was not presented as the Bank had a very low and not
material trading portfolio (Ps.7.6 million as of December 31, 2002), as a result
of the Bank's participation in the public-sector debt swap performed in November
2001 and of the situation of the Argentine financial and securities markets
during 2002.

Net Trading Portfolio

The table below shows the effect of changes in the exchange rate of the peso
vis-a-vis the dollar on the fair value of the Bank's net trading financial
portfolio as of December 31, 2000.

                                     -213-

<PAGE>

<TABLE>
<CAPTION>
NET TRADING PORTFOLIO                                                       AS OF DECEMBER 31, 2000, FAIR VALUE OF PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------
PERCENTAGE CHANGE IN THE VALUE OF THE PESO RELATIVE TO THE DOLLAR (1)         AMOUNT        ABSOLUTE VARIATION      % CHANGE
----------------------------------------------------------------------------------------------------------------------------
                                                                           (in millions of December 31, 2002, constant pesos)
<S>                                                                         <C>             <C>                     <C>
      40% ...........................................................       Ps.   162           PS.    46              40
      30% ...........................................................             151                  35              30
      20% ...........................................................             139                  23              20
      10% ...........................................................             128                  12              10
      Static ........................................................             116                   -               -
      -10% ..........................................................             104                 (12)            (10)
      -20% ..........................................................              93                 (23)            (20)
      -30% ..........................................................              81                 (35)            (30)
      -40% ..........................................................              70                 (46)            (40)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Devaluation / (Revaluation).

As of December 31, 2000, the Bank reduced significantly its foreign exchange
net trading portfolio as compared with the June 30, 2000 level. This reflects a
Ps.535 million decrease in the Bank's position in dollar-denominated Argentine
Treasury Bills (LETES) that were replaced by loans to the Argentine public
sector.

Net Non-Trading Portfolio

The effect of changes in the exchange rate of the peso vis-a-vis the dollar on
the fair value of the Bank's net non-trading financial portfolio as of December
2000 and of its net portfolio as of December 31, 2002 and December 31, 2001 is
summarized in the following tables.

<TABLE>
<CAPTION>
NET PORTFOLIO                                                               AS OF DECEMBER 31, 2002, FAIR VALUE OF PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------
PERCENTAGE CHANGE IN THE VALUE OF THE PESO RELATIVE TO THE DOLLAR (1)         AMOUNT        ABSOLUTE VARIATION      % CHANGE
----------------------------------------------------------------------------------------------------------------------------
                                                                           (in millions of December 31, 2002, constant pesos)
<S>                                                                         <C>             <C>                     <C>
      40% ...........................................................       Ps.   777          Ps.    222              40
      30% ...........................................................             722                 167              30
      20% ...........................................................             666                 111              20
      10% ...........................................................             611                  56              10
      Static ........................................................             555                   -               -
      -10% ..........................................................             500                 (55)            (10)
      -20% ..........................................................             444                (111)            (20)
      -30% ..........................................................             389                (166)            (30)
      -40% ..........................................................             333                (222)            (40)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Devaluation / (Revaluation).

                                     -214-

<PAGE>

<TABLE>
<CAPTION>
NET PORTFOLIO                                                               AS OF DECEMBER 31, 2001, FAIR VALUE OF PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------
PERCENTAGE CHANGE IN THE VALUE OF THE PESO RELATIVE TO THE DOLLAR (1)         AMOUNT        ABSOLUTE VARIATION      % CHANGE
----------------------------------------------------------------------------------------------------------------------------
                                                                           (in millions of December 31, 2002, constant pesos)
<S>                                                                         <C>             <C>                     <C>
      40% ...........................................................       Ps. 5,165         Ps. 1,476                40
      30% ...........................................................           4,796             1,107                30
      20% ...........................................................           4,427               738                20
      10% ...........................................................           4,058               369                10
      Static ........................................................           3,689                 -                 -
      -10% ..........................................................           3,320              (369)              (10)
      -20% ..........................................................           2,951              (738)              (20)
      -30% ..........................................................           2,582            (1,107)              (30)
      -40% ..........................................................           2,213            (1,476)              (40)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Devaluation / (Revaluation).

<TABLE>
<CAPTION>
NET NON TRADING PORTFOLIO                                                   AS OF DECEMBER 31, 2000, FAIR VALUE OF PORTFOLIO
----------------------------------------------------------------------------------------------------------------------------
PERCENTAGE CHANGE IN THE VALUE OF THE PESO RELATIVE TO THE DOLLAR (1)         AMOUNT        ABSOLUTE VARIATION      % CHANGE
----------------------------------------------------------------------------------------------------------------------------
                                                                           (in millions of December 31, 2002, constant pesos)
<S>                                                                         <C>             <C>                     <C>
      40% ...........................................................       Ps.1,284            Ps. 367                40
      30% ...........................................................          1,192                275                30
      20% ...........................................................          1,100                183                20
      10% ...........................................................          1,009                 92                10
      Static ........................................................            917                  -                 -
      -10% ..........................................................            825                (92)              (10)
      -20% ..........................................................            734               (183)              (20)
      -30% ..........................................................            642               (275)              (30)
      -40% ..........................................................            550               (367)              (40)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Devaluation / (Revaluation).

As of December 31,2002 the Bank had a net asset position in foreign currency 85%
lower than that as of December 31, 2001. The December 31, 2001, reflected a
situation prior to the devaluation of the peso (January 2002). The decrease as
of December 31, 2002 was mainly attributable to the compensation, by the
Government, of the effects of the "asymmetric pesification" of certain assets
and liabilities through, in the case of the Bank, dollar-denominated bonds,
given that the "asymmetric pesification", among others, left the Bank with an
involuntary short foreign currency position. In accordance with the compensation
rules applicable, the total amount of compensation determined for the Bank
(compensatory and hedge bonds) was US$2,254 million in Boden 2012. At the date
hereof, this amount is subject to review by the Argentine Central Bank.

As of December 31, 2001, the Bank's net asset foreign currency position
increased 257.2% as compared with December 31, 2000 levels, mainly as a result
of the reduction in its deposit base (mostly composed of dollar-denominated
deposits) during 2001. During 2001 the Bank's dollar-denominated deposits
decreased by Ps.2,863.7 million. This source of funds was replaced by the
financial assistance of the Argentine Central Bank, in its capacity as lender of
last resort, which is denominated in pesos.

The Ps.592 million increase in the net non-trading foreign exchange portfolio as
of December 31, 2000 when compared with June 30, 2000 was due to an increase in
loans to the Argentine public sector.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

                                     -215-

<PAGE>

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Grupo Galicia's subsidiary, Banco de Galicia y Buenos Aires, S.A. and its Cayman
Branch (the "Bank"), currently have the following payment defaults under the
following indebtedness:

-    Loans under the Reimbursement and Credit Agreement, dated as of September
     22, 2000, as amended, among the Bank, HSBC Bank USA, as Issuing Bank, the
     lenders party thereto, Bank of America, N.A., as Administrative Agent, and
     Bank of America Securities LLC and HSBC Securities (USA) Inc., as joint
     Arrangers. As of June 30, 2003, the total principal amount in default is
     US$82.000.000 and the total accrued and unpaid interest is US$7.414.166.

-    Loans under the Reimbursement and Credit Agreement, dated as of February
     23, 2001, among the Bank, Bayerische Hypo-und Vereinsbank AG, acting
     through its New York Branch, as Issuing Bank, the Lenders party thereto,
     The Chase Manhattan Bank as Administrative Agent and JP Morgan, a division
     of Chase Securities Inc., as Arranger. As of June 30, 2003, the total
     principal amount in default is US$250.000.000 and the total accrued and
     unpaid interest is US$25.348.959.

-    Notes issued under the Indenture, dated as of November 8, 1993, among the
     Bank, the Bank of New York, as the Trustee, the co-Registrar, the principal
     Paying Agent and the Registrar. As of June 30, 2003, the total accrued and
     unpaid interest is US$29.865.253. The US$200,000,000 in principal amount on
     the notes issued under this Indenture mature on November 1, 2003.

-    Floating Rate Notes issued under the Indenture, dated as of August 5,1997,
     among the Bank, UBS AG (formerly SBC Warburg Inc.), as Lead Manager,
     Citicorp Trust Company Limited, London, as Trustee and Citibank N.A.,
     London, as Paying and Issue Agent. As of June 30, 2003, the total principal
     amount in default is US$150.000.000 and the total accrued and unpaid
     interest is US$7.983.760.

-    Floating Rate Notes issued under the Indentures, dated as of December 18,
     2000 and June 7, 2001, among the Bank, Santander Central Hispano Investment
     Securities Inc, New York, as Arranger and Syndication Agent, Banco
     Santander Central Hispano S.A., acting through its New York Branch, as
     Administrative and PRI Agent, the Initial Purchasers and The Bank of New
     York, New York, as Principal Paying Agent. As of June 30, 2003, the total
     principal amount in default is US$20.666.667 and the total accrued and
     unpaid interest is US$3.414.224. The remaining principal amount of these
     Notes is US$34.444.444, redeemable semi-annually with final maturity on
     December 20,2005.

-    Loans under the Investment Agreement, dated as of July 19, 1996, as amended
     and restated as of July 2, 1999, among the Bank, the International Finance
     Corporation and Dresdner Bank AG, New York Branch, as Arrangers, Dresdner
     Bank AG, New York Branch, as Issuing Bank, the Lenders party thereto and
     Bankers Trust Company as Depositary and Administrative Agent. As of June
     30, 2003, the total principal amount in default is US$245.000.000 and the
     total accrued and unpaid interest is US$14.886.302.

-    Loans under the Investment Agreement, dated July 19, 1996 and the Credit
     Line Agreement, dated January 25, 1999, among the Bank and the
     International Finance Corporation. As of June 30, 2003, the total principal
     amount in default is US$17.857.142 and the total accrued and unpaid
     interest is US$4.809.409. The remaining principal amount of these Loans is
     US$47.142.858, with final maturity on March 15, 2009.

-    Loans under the Financial Intermediary Loan Agreement dated March 5, 1993,
     and the Amended and Restated Financial Intermediary Loan Agreements dated
     as of April 5, 1994, March 15, 1996 and June 23, 1997, among the Bank and
     the Inter-American Investment Corporation. As of June 30, 2003, the total
     principal amount in default is for the A Loan US$2.727.270 and the total
     accrued and unpaid interest is US$217.475; for the Extended B Loan
     US$3.888.889 and the total accrued and unpaid interest is US$232.577 and
     for the Second Extended B Loan US$18.999.999 and the total accrued and
     unpaid interest is US$1.204.741. The remaining

                                     -216-

<PAGE>

     principal amount of the A Loan is US$909.090 with final maturity on October
     15, 2003 and for the Second Extended B Loan is US$6.333.333 with final
     maturity on October 15, 2003. The extended B Loan matured on April 15,
     2002.

-    Loans under the Financial Intermediary Loan Agreement dated December 21,
     1998, among the Bank and the Inter-American Investment Corporation. As of
     June 30, 2003, the total principal amount in default is for the A Loan
     US$1.764.705 and the total accrued and unpaid interest is US$645.113; for
     the B Loan US$9.272.727 and the total accrued and unpaid interest is
     US$1.937.276. The remaining principal amount of the A Loan is US$7.058.820
     with final maturity on February 15, 2009 and for the B Loan is
     US$18.545.454 with final maturity on February 15, 2006.

-    Loan under the Loan Agreement dated September 12, 1995, among the Bank and
     the FMO (Netherlands Development Finance Company). As of June 30, 2003, the
     total principal amount in default is US$2.000.000 and the total accrued and
     unpaid interest is US$129.667.

-    Loan under the Loan Agreement dated February 29, 1996, among the Bank and
     the FMO (Netherlands Development Finance Company). As of June 30, 2003, the
     total principal amount in default is US$2.499.999 and the total accrued and
     unpaid interest is US$329.810. The remaining principal amount of this loan
     is US$1.669.001, with final maturity on May 15, 2004.

-    Loan under the Loan Agreement dated September 11, 1998, among the Bank and
     the FMO (Netherlands Development Finance Company). As of June 30, 2003, the
     total principal amount in default is US$2.812.500 and the total accrued and
     unpaid interest is US$754.118. The remaining principal amount of this loan
     is US$10.312.500, with final maturity on August 15, 2008.

-    Loans under the Export Credit Guarantee Program GSM-102 of the Commodity
     Credit Corporation, United States Department of Agriculture, among the Bank
     and U.S. Banks. As of June 30, 2003, the total principal amount in default
     is US$34.059.985 and the total accrued and unpaid interest is US$1.529.786.
     The remaining principal amount of this loan is US$68.119.972, with final
     maturity on June 23, 2004.

-    Trade and Financial Loans, among the Bank and Foreign Banks. As of June 30,
     2003, the total principal amount in default is US$121.864.175 and the total
     accrued and unpaid interest is US$6.547.759.759. Of the above mentioned
     outstanding, the remaining principal amount is US$376.875 with final
     maturity on May 26, 2006.

-    Deposits placed by Banco Galicia Uruguay S.A. in the Bank. As of June 30,
     2003, the total principal amount in default is US$399.512.800 and the total
     accrued and unpaid interest is US$23.998.398

Contractual rates were used to bring the amounts up to June 30, 2003. All of
these debts are currently undergoing a restructuring process, which has not
finalized at the date hereof.

In additon, as of June 30, 2003, the regional credit-card companies in which the
Bank had majority interests had US$17.5 million in principal and interest, due
and unpaid under various negotiable obligations programs.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS

[Not applicable]

ITEM 15. CONTROLS AND PROCEDURES

An evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rules 13a-15 (c) and 15d-15(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as
of June 30, 2003 (the "Evaluation Date"), which was within 90 days of this
annual report, was carried out by the Company under the supervision and with
participation of the Company's management, including the Chief Executive Officer
and Chief Financial Officer. Based on that evaluation, the Company's Chief
Executive

                                     -217-

<PAGE>

Officer and Chief Financial Officer have concluded, in their judgment that, as
of the Evaluation Date, the Company's disclosure controls and procedures have
been designed to provide, and are effective in providing, reasonable assurance
that the information required to be disclosed by the Company in reports filed
under the Exchange Act is recorded, processed, summarized and resorted within
the time periods specified in the Securities and Exchange Commission's rules and
forms. A controls system, no mater how well designed and operated, cannot
provide absolute assurance that the objectives of the controls system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been detected.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect the internal controls subsequent to the
Evaluation Date, including corrective actions with regard to significant
deficiencies and material weaknesses.

ITEM 16. [RESERVED]

Not Applicable.

                                     -218-

<PAGE>

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

The Registrant has elected to provide financial statements for the fiscal year
ended December 31, 2000 and the related information pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

Report of the Independent Accountants

Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001

Consolidated Statements of Income for the years ended December 31, 2002, and
December 31, 2001 and for the six-months ended December 31, 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002, and
December 31, 2001 and for the six-months ended December 31, 2000

Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 2002, and December 31, 2001 and for the six-months ended December
31, 2000

Notes to the Consolidated Financial Statements

ITEM 19. EXHIBITS

(a)      Financial Statements.

(b)      Exhibits.

1.1      English translation of the By-laws (estatutos sociales).*

1.2      Spanish version of the By-laws (estatutos sociales).*

2.1      Form of Deposit Agreement between The Bank of New York and the
         registrant, including the form of American Depositary Receipt.*

2.2      Lock Up Letter Agreement provided by the controlling shareholders of
         the registrant.*

2.3      English translation of the EBA Holding S.A. Declaration provided by EBA
         Holding S.A.*

2.4      English translation of Declaration of the shareholders of EBA Holding
         S.A.*

2.5      Spanish version of shareholders resolution of registrant dated May 16,
         2000 (together with English translation).*

2.6      Spanish version of shareholders resolution of registrant, dated May 29,
         2000 (together with English translation).*

2.7      Spanish version of Board of Directors resolution of registrant, dated
         June 5, 2000 (together with English translation).*

2.8      English translation of Board of Directors resolution of registrant,
         dated June 15, 2000.*

                                     -219-

<PAGE>

4.1      English translation of form of Financial Trust Contract, dated April
         12, 2002, among the Bank, ABN AMRO BANK, Argentine Branch (the
         trustee), Banco Rio de la Plata S.A., BankBoston N.A. (Buenos Aires
         Branch), BBVA Banco Frances S.A., HSBC Bank Argentina S.A., Seguro de
         Depositos S.A., Banco Macro S.A., Banco Credicoop Cooperativo Limitado,
         Banca Nazionale del Lavoro S.A., Banco Mariva S.A., Banco Comafi S.A.,
         Banco Patagonia S.A., Banco Saenz S.A. and Banco de Valores S.A.

4.2      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.

4.3      English translation of form of Loan Agreement, dated March 21, 2002,
         by and between Seguro de Depositos S.A. and the Bank.

4.4      English translation of form of Loan Agreement, dated April 30, 2002,
         between BANCO DE LA NACION ARGENTINA, in its capacity as trustee of the
         Trust Fund for Assistance to Financial Institutions and Insurance
         Companies Fiduciary Fund for the Assistance to Financial Institutions
         and Insurance Companies and the Bank.

12.1     English translation of the Annual Report for the Fiscal Year ended
         December 31, 2002.

12.2     Statement Under Oath of Principal Executive Officer Regarding Facts and
         Circumstances Relating to Exchange Act Filings.

12.3     Statement Under Oath of Principal Financial Officer Regarding Facts and
         Circumstances Relating to Exchange Act Filings.

* Incorporated by reference from Registration Statement on Form F-4 (333-11960).

                                     -220-

<PAGE>

                                    SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and it has duly caused and authorized the undersigned to sign this
annual report on its behalf.

                                          GRUPO FINANCIERO GALICIA S.A.

                                          By: /s/ Antonio Garces
                                             -----------------------------------
                                             Name: Antonio Garces
                                             Title: Chairman of the Board, Chief
                                                    Executive Officer

Date: July 14, 2003

                                     -221-

<PAGE>

                                 CERTIFICATIONS

I, Antonio Garces, the principal executive officer of Grupo Financiero Galicia,
S.A., certify that:

         1.       I have reviewed this annual report on Form 20-F of Grupo
                  Financiero Galicia S.A.;

         2.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and have:

                      a)   designed such disclosure controls and procedures to
                  ensure that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

                      b)   evaluated the effectiveness of the registrant's
                  disclosure controls and procedures as of a date within 90 days
                  prior to the filing date of this annual report (the
                  "Evaluation Date"); and

                      c)   presented in this annual report our conclusions about
                  the effectiveness of the disclosure controls and procedures
                  based on our evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  function):

                      a)   all significant deficiencies in the design or
                  operation of internal controls which could adversely affect
                  the registrant's ability to record, process, summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

                      b)   any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this annual report whether or not there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.

Date: July 14, 2003

                                          /s/ Antonio Garces
                                          --------------------------------------
                                          Name:  Antonio Garces
                                          Title: Chairman of the Board and Chief
                                                 Executive Officer

                                     -222-
<PAGE>

I, Pedro A. Richards, the principal financial officer of Grupo Financiero
Galicia, S.A., certify that:

         1.       I have reviewed this annual report on Form 20-F of Grupo
                  Financiero Galicia S.A.;

         2.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and have:

                      a)   designed such disclosure controls and procedures to
                  ensure that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

                      b)   evaluated the effectiveness of the registrant's
                  disclosure controls and procedures as of a date within 90 days
                  prior to the filing date of this annual report (the
                  "Evaluation Date"); and

                      c)   presented in this annual report our conclusions about
                  the effectiveness of the disclosure controls and procedures
                  based on our evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  function):

                      a) all significant deficiencies in the design or operation
                  of internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

                      b) any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this annual report whether or not there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.

Date: July 14, 2003

                                          /s/ Pedro A. Richards
                                          --------------------------------------
                                          Name: Pedro A. Richards
                                          Title: Managing Director
                                                 (Chief Financial Officer)

                                     -223-
<PAGE>
                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
                                                                                                            ----
<S>                                                                                                         <C>
Report of the Independent Accountants as of and for the fiscal years ended December 31, 2002 and 2001,
 the six months ended December 31, 2000 and the fiscal year ended June 30, 2000...........................   F-2

Consolidated Balance Sheets as of December 31, 2002 and 2001..............................................   F-4

Consolidated Statements of Income for the years ended December 31, 2002 and 2001, for the six months
 ended December 31, 2000 and for fiscal year ended June 30, 2000..........................................   F-7

Consolidated Statements of Cash Flows for the years ended December 31, 2002 and 2001, for the six months
 ended December 31, 2000 and for the fiscal year ended June 30, 2000......................................   F-9

Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2002 and
 2001, for the six months ended December 31, 2000 and for the fiscal years ended June 30, 2000............  F-11

Notes to the Consolidated Financial Statements............................................................  F-13
</TABLE>

                                      F-1

<PAGE>

                      REPORT OF THE INDEPENDENT ACCOUNTANTS

To the Chairman and Directors of
Grupo Financiero Galicia S.A.

We have audited the consolidated balance sheets of Grupo Financiero Galicia S.A.
and subsidiaries at December 31, 2002 and 2001 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
year ended December 31, 2002 and 2001, for the six-month period ended December
31, 2000 and of Banco de Galicia y Buenos Aires and subsidiaries for the year
ending June 30, 2000, as well as their accompanying notes 1 to 40. These
consolidated financial statements and notes are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements.

We conducted our audits in accordance with auditing standards generally accepted
in both Argentina and the United States and performed the auditing procedures
required by the Banco Central de la Republica Argentina (the "Argentine Central
Bank"). Those standards require that we plan and perform an audit to obtain
reasonable assurance as to whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As mentioned in Note 2 and 38, the accompanying consolidated financial
statements have been prepared in accordance with accounting rules prescribed by
the Argentine Central Bank, which differ in certain respects from, and is a
comprehensive basis of accounting other than, Argentine generally accepted
accounting principles applicable to enterprises in general.

The presentation of the financial statements and notes thereto are presented in
accordance with Argentine Central Bank rules that differ in certain material
respects from U.S. GAAP and from disclosure requirements of the Securities and
Exchange Commission. A description of these differences applicable for the year
ended December 31, 2002 and 2001, for the six months ended December 31, 2000 and
for the year ending June 30, 2000 are included in notes 24, 27, 31, 36 and 39 to
the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Grupo Financiero
Galicia S.A. and subsidiaries at December 31, 2002 and 2001, and the results of
operations, changes in shareholder's equity and cash flows for the year ended
December 31, 2002 and 2001 and for the six-month period ended December 31, 2000
and the financial position of Banco de Galicia y Buenos Aires S.A. and
subsidiaries at June 30, 2000, and the results of their operations, changes in
shareholders' equity and cash flows for the fiscal year ended June 30, 2000, in
conformity with rules prescribed by the Argentine Central Bank. Such rules
prescribed by the Argentine Central Bank differ in certain respects from
generally accepted accounting principles in the United States and from
presentation and disclosure requirements of the Securities and Exchange
Commission's regulations, as disclosed in notes 27 and 39 to the consolidated
financial statements.

                                      F-2

<PAGE>

The accompanying consolidated financial statements as of December 31, 2002 and
2001 have been prepared assuming that Grupo Financiero Galicia S.A. will
continue as a going concern. As mentioned in note 1 to the accompanying
consolidated financial statements, the country of Argentina has been subject to
a financial and economic crisis that caused significant measures to be taken by
the Argentine Government beginning at the end of 2001 and continuing into 2003.
Many of the measures adopted by the Argentine Government significantly affected
the liquidity, solvency and profitability of the financial system as a whole and
have adversely affected other businesses and individuals in Argentina. The
Argentine Government and Central Bank have adopted additional measures designed
to moderate such effects while fostering a restructuring of the financial system
and attempting to stay the economic downturn. Regulations of the Argentine
Government and Central Bank are being implemented and further regulations are
being considered. In addition, the Company's most significant subsidiary (Banco
de Galicia y Buenos Aires S.A., the "Bank"), comprising approximately 85.6% of
the Company's total assets, has filed and received approval from the Argentine
Central Bank, of a restructuring and rehabilitation plan, which call for among
other things, certain restructuring on external debt and an increase in capital.
It is uncertain whether the restructuring of the financial system as a whole,
the other measures designed to stay the economic downturn and the Bank's
rehabilitation and restructuring plan will be successful enough to allow the
Company to continue its operations and meet its solvency and liquidity ratios
required by the Argentine Central Bank. This situation and the financial outcome
of the uncertainties and its possible impact on the recoverability of the
Company's assets and the settlement of the Company's liabilities give rise to a
substantial doubt that the Company can continue as a going concern. The
consolidated financial statements as of December 31, 2002 do not include any
adjustment that might reflect the outcome of these uncertainties.

                                                      /s/ PricewaterhouseCoopers

Buenos Aires, Argentina
February 17, 2003, except for note 1 and 37 as to which the date is June 17,
2003.

                                      F-3

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                         AS OF DECEMBER 31 2002 AND 2001

  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                        ------------------------------------
                                                                    DECEMBER 31,
                                                        ------------------------------------
                                                              2002                2001
                                                        ----------------    ----------------
<S>                                                     <C>                 <C>
ASSETS
A.  Cash and due from banks
    Cash..............................................  Ps.      248,056    Ps.      529,427
    Banks and correspondents..........................           323,178             599,117
    Other.............................................               619               1,459
                                                        ----------------    ----------------
                                                        Ps.      571,853    Ps.    1,130,003
B.  Government and corporate securities
    Holdings of investment account securities.........         1,658,463                   -
    Holdings of trading securities....................             7,614             127,872
    Unlisted government securities....................           145,410             143,283
    Investments in listed corporate securities........             9,354              12,875
    Allowances........................................            (6,815)               (253)
                                                        ----------------    ----------------
                                                        Ps.    1,814,026    Ps.      283,777

C.  Loans
    To the non-financial government sector............         7,623,560           8,681,840
    To the financial sector...........................           133,644             189,186
    To the non-financial private sector and residents          4,499,938          12,103,589
     abroad
      Overdrafts......................................           225,023             804,033
      Notes...........................................         1,530,917           3,855,290
      Mortgage loans..................................           856,495           3,269,754
      Pledge loans....................................           189,879             834,599
      Consumer loans..................................           118,948             578,332
      Credit card loans...............................           579,889           1,859,055
      Others..........................................           408,478             568,347
      Accrued Interest and quotation differences
      receivable......................................           603,218             388,735
      Document interest...............................           (10,738)            (54,554)
      Unallocated collections                                     (2,171)                 (2)
    Allowances........................................        (1,667,300)         (1,041,206)
                                                        ----------------    ----------------
                                                        Ps.   10,589,842    Ps.   19,933,409

D.  Other receivables resulting from financial
     brokerage
    Argentine Central Bank............................            55,425             133,472
    Amounts receivable for spot and forward sales
    to be settled.....................................             1,905             389.061
    Securities receivable under spot and forward
    purchases to be settled...........................               669           1,576,018
    Premiums on options bought........................                 -                 155
    Unlisted negotiable obligations...................           131,173             176,977
    Compensation to be received from the National
    Government........................................         7,037,155                   -
    Other.............................................         1,993,335           1,540,712
    Allowances........................................           (43,954)            (16,302)
                                                        ----------------    ----------------
                                                        Ps.    9,175,708    Ps.    3,800,093
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-4

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2002 AND 2001

  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                        ------------------------------------
                                                                    DECEMBER 31,
                                                        ------------------------------------
                                                             2002                2001
                                                        --------------      ----------------
<S>                                                     <C>                 <C>
ASSETS (CONTINUED)
E.    Assets under financial leases
      Assets under financial leases.................    Ps.     24,885      Ps.       97,748
      Allowances....................................            (2,439)               (1,116)
                                                        --------------      ----------------
                                                        Ps.     22,446      Ps.       96,632
F.    Equity investments in other companies
      In financial institutions.....................             3,456                 2,246
      Other.........................................           152,281               179,412
      Allowances....................................           (52,384)              (33,295)
                                                        --------------      ----------------
                                                        Ps.    103,353      Ps.      148,363
G.    Miscellaneous receivables
      Debtors for sale of assets....................               655                 1,616
      Other.........................................           357,488               886,454
      Accrued interest on debtors for sale of
      assets receivable.............................                 2                    31
      Other accrued interest receivable.............               165                   284
      Allowances....................................           (29,121)              (55,071)
                                                        --------------      ----------------
                                                        Ps.    329,189      Ps.      833,314

H.    Fixed assets..................................           565,545               618,899

I.    Miscellaneous assets..........................           183,165               231,284

J.    Intangible assets
      Goodwill......................................           168,911               276,231
      Organization and development expenses.........           150,254               217,016
                                                        --------------      ----------------
                                                        Ps.    319,165      Ps.      493,247

K.    Unallocated items.............................            23,627                67,669
                                                        --------------      ----------------
                        TOTAL ASSETS................    Ps. 23,697,919      Ps.   27,636,690
                                                        ==============      ================
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-5

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2002 AND 2001

  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                        ------------------------------------
                                                                    DECEMBER 31,
                                                        ------------------------------------
                                                             2002                 2001
                                                        --------------      ----------------
<S>                                                     <C>                 <C>
     LIABILITIES AND SHAREHOLDERS' EQUITY

L.   Deposits
     Non-financial government sector................    Ps.      7,758      Ps.       25,182
     Financial sector...............................             2,921                38,476
     Non-financial private sector and residents
      abroad........................................         5,153,658            13,322,460
       Current accounts.............................           717,102             1,848,428
       Saving accounts..............................           558,995             3,212,579
       Time deposits................................         2,402,212             6,876,795
       Investment accounts..........................                 -               176,060
       Other........................................         1,101,361             1,077,880
       Accrued interest and quotation differences
        payable ....................................           373,988               130,718
                                                        --------------      ----------------
                                                        Ps.  5,164,337      Ps.   13,386,118

M.   Other liabilities resulting from financial
       brokerage
     Argentine Central Bank
         Liquidity assistance loans ................         5,402,778             2,695,575
         Other......................................         2,633,226               705,690
     Banks and international entities...............         3,157,185             1,642,837
     Unsubordinated negotiable obligations..........         3,434,596             1,833,115
     Amounts payable for spot and forward purchases
      to be settled.................................             2,115             1,391,242
     Securities to be delivered under spot and
      forward sales to be settled...................           123,454               375,087
     Loans from domestic financial institutions.....           199,531               349,199
      Other.........................................           999,765             1,370,185
     Accrued interest and quotation differences
      payable.......................................           276,829                82,663
                                                        --------------      ----------------
                                                        Ps. 16,229,479      Ps.   10,445,593
N.   Miscellaneous liabilities
     Dividends payable..............................                46                   467
     Directors' and Syndics' fees payable...........             2,194                 6,206
     Other..........................................           252,284               364,224
     Accrued adjustments and interest payable.......                 6                    11
                                                        --------------      ----------------
                                                        Ps.    254,530      Ps.      370,908

O.   Provisions.....................................           331,668                75,662
P.   Unallocated items..............................            10,348                24,689
Q.   Minority interests.............................            83,082               256,973
                                                        --------------      ----------------
                      TOTAL LIABILITIES.............    Ps. 22,073,444      Ps.   24,559,943
                                                        --------------      ----------------

     SHAREHOLDERS' EQUITY ..........................         1,624,475             3,076,747
                                                        --------------      ----------------
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..    Ps. 23,697,919      Ps.   27,636,690
                                                        ==============      ================
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-6

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
 FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS ENDED
         DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                               GRUPO GALICIA                           BANCO GALICIA
                                                       ---------------------------------------------  --------------
                                                                                        SIX-MONTHS
                                                                                           ENDED        YEAR ENDED
                                                          YEARS ENDED DECEMBER 31,      DECEMBER 31,      JUNE 30,
                                                       -------------  --------------   -------------  --------------
                                                            2002           2001            2000            2000
                                                       -------------  --------------   -------------  --------------
<S>                                                    <C>            <C>              <C>            <C>
A.   Financial income
     Interest on cash and due from banks...........    Ps.     2,349  Ps.     63,184   Ps.    53,695  Ps.    103,317
     Interest on loans granted to the financial
     sector........................................           86,072          95,518          40,892          80,570
     Interest on overdrafts........................          135,657         254,247         129,119         240,160
     Interest on notes.............................          218,903       1,375,700         650,295       1,184,884
     Interest on mortgage loans....................          124,337         439,591         194,767         325,387
     Interest on pledge loans......................           59,176          90,802          51,139         103,122
     Interest on credit card loans.................          175,672         363,291         162,859         387,632
     Interest on other loans.......................          115,411         371,989         155,697         210,489
     Interest income from other receivables
     resulting from financial brokerage............          226,008         108,341          43,695          84,644
     Net income from government and corporate
     securities....................................          599,545         156,538         161,713         300,956
     Net income from options.......................                -               -               -             391
     Net income from guaranteed loans - Decree No.
     1387/01.......................................          221,796          70,867               -               -
     Consumer price index adjustment...............        3,373,381               -               -               -
     Others........................................          409,257         165,728         147,882         253,730
                                                       -------------  --------------   -------------  --------------
                                                       Ps. 5,747,564  Ps.  3,555,796   Ps. 1,791,753  Ps.  3,275,282

B.   Financial expenses
     Interest on current accounts..................           17,413          52,354               -               -
     Interest on savings accounts..................            8,074          36,976          25,348          54,608
     Interest on time deposits.....................          289,329       1,310,110         552,407         955,852
     Interest on loans from the financial sector...           26,249          15,691           1,219          10,774
     Interest expense from other liabilities
     resulting from financial brokerage............          647,395         430,097         261,412         432,793
     Other interest ...............................        1,591,499          84,858          19,974          35,593
     Net loss on options...........................              261           1,132           2,222               -
     Consumer price index adjustment...............        1,719,656               -               -               -
     Others........................................          221,115         176,536         104,662         206,333
                                                       -------------  --------------   -------------  --------------
                                                       Ps. 4,520,991  Ps.  2,107,754   Ps.   967,244  Ps.  1,695,953

C.   Gross brokerage margin.........................       1,226,573       1,448,042         824,509       1,579,329

     Loan loss provision ..........................        1,634,328         999,798         270,171         544,939

D.   Income from services
     In relation to lending transactions...........          141,166         326,870         127,046         138,549
     In relation to borrowing transactions.........          148,590         260,577         123,824         244,478
     Other commissions.............................           14,287         101,302          41,775          59,054
     Other.........................................          207,522         458,049         220,475         487,250
                                                       -------------  --------------   -------------  --------------
                                                       Ps.   511,565  Ps.  1,146,798   Ps.   513,120  Ps.    929,331

E.   Expenses for services
     Commissions...................................           99,489         103,793          47,749          92,842
     Other.........................................           39,935         108,450          47,531          88,793
                                                       -------------  --------------   -------------  --------------
                                                       Ps.   139,424  Ps.    212,243   Ps.    95,280  Ps.    181,635
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-7

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
 FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS ENDED
         DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                               GRUPO GALICIA                                  BANCO GALICIA
                                                       --------------------------------------------------    ---------------
                                                                                             SIX-MONTHS
                                                                                               ENDED            YEAR ENDED
                                                            YEARS ENDED DECEMBER 31,        DECEMBER 31,         JUNE 30,
                                                       ---------------   ---------------   --------------    ---------------
                                                             2002             2001              2000               2000
                                                       ---------------   ---------------   --------------    ---------------
<S>                                                    <C>               <C>               <C>               <C>
F.  Monetary result of financial brokerage.........    Ps.  (1,425,319)  Ps.           -   Ps.          -    Ps.           -

G.  Administrative expenses
    Personnel expenses.............................            491,738           693,575          340,763            648,041
    Directors' and syndics' fees...................              3,208            35,121           26,047             80,159
    Other fees.....................................             27,784            25,027           16,547             34,536
    Advertising and publicity......................             15,236            54,060           33,002             60,356
    Taxes..........................................             57,262            83,783           23,109             51,635
    Other operating expenses.......................            287,696           370,012          172,678            353,020
    Other..........................................             56,401            96,571           47,304             99,487
                                                       ---------------   ---------------   --------------    ---------------
                                                       Ps.     939,325   Ps.   1,358,149   Ps.    659,450    Ps.   1,327,234

H.  Monetary result of operating expenses..........    Ps.      20,819   Ps.           -   Ps.          -    Ps.           -

    Net (loss)/income from financial brokerage.....         (2,379,439)           24,650          312,728            454,852

I.  Minority interests.............................            267,242           (21,967)         (13,779)               651

J.  Miscellaneous income
    Net income on long term investments............                  -            34,656                -                  -
    Penalty interest...............................              6,198             6,929            3,528              9,889
    Loans recovered and allowances reversed........             37,800            83,202           49,398             64,908
    Consumer price index adjustment................              1,115                 -                -                  -
    Other..........................................            243,775           598,356           36,371             67,687
                                                       ---------------   ---------------   --------------    ---------------
                                                       Ps.     288,888   Ps.     723,143   Ps.     89,297    Ps.     142,484
K.  Miscellaneous losses
    Net loss on long-term investments..............             51,522                 -            9,714             11,973
    Penalty interest and charges in favor of the
    Argentine Central Bank.........................                640               107              341                730
    Loan loss provision from miscellaneous
    receivables and other provisions...............            445,405            82,785           21,112             22,277
    Consumer price index adjustment................                 22                 -                -                  -
    Other..........................................            268,561           223,003           46,273             59,389
                                                       ---------------   ---------------   --------------    ---------------
                                                       Ps.     766,150   Ps.     305,895   Ps.     77,440    Ps.      94,369

L.  Monetary Result of other operations............    Ps.    (161,680)  Ps.           -   Ps.          -    Ps.           -

    Net income before tax..........................         (2,751,139)          419,931          310,806            503,618

M.  Income tax.....................................            (65,847)         (157,677)        (114,405)          (162,141)
                                                       ---------------   ---------------   --------------    ---------------
    Net (loss)/income for the period before the
    Absorption.....................................    Ps. (2,816,986)   Ps.     262,254   Ps.    196,401    Ps.     341,477

    Absorption subject to the Approval of the
    Annual Share-holders Meeting (*) ..............          1,358,193                 -                -                  -
                                                       ---------------   ---------------   --------------    ---------------
    Net income for the year after the Absorption...    Ps.  (1,458,793)  Ps.     262,254   Ps.    196,401     Ps.    341,477
                                                       ===============   ===============   ==============    ===============
    Net income per common share before the
    absorption(basic and assuming full dilution)...             (2.579)            0.240            0.192              0.291

    Net income per common share after the
    absorption (basic and assuming full dilution)..             (1.335)            0.240            0.192              0.291
</TABLE>

(*) Effect on the foreign currency position compensation,
   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-8

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS
       ENDED DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                                      GRUPO GALICIA                          BANCO GALICIA
                                                    --------------------------------------------------     ---------------
                                                                                          SIX-MONTHS
                                                                                             ENDED            YEAR ENDED
                                                         YEARS ENDED DECEMBER 31,         DECEMBER 31,          JUNE 30,
                                                    --------------     --------------    -------------     ---------------
                                                         2002                2001            2000                2000
                                                    --------------     --------------    -------------     ---------------
<S>                                                 <C>                <C>               <C>               <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income.......................................   Ps.  (1,458,793)   Ps.    262,254    Ps.   196,401    Ps.      341,477
Adjustments to reconcile net income to net cash
from Operating activities:
Depreciation of bank premises and equipment and
Miscellaneous assets.............................            65,208            62,992           28,258              56,443
Amortization of intangible assets................           167,165           109,968           45,243              91,558
Increase in allowances for loan and other
losses, net of reversals.........................         2,063,749         1,044,701          277,002             516,840
Equity (income) loss of unconsolidated
subsidiaries.....................................            51,522           (11,488)          (6,269)              9,871
Loss on sale of premises and equipment...........           (59,430)            7,632            1,254               2,392
Accretion of discount on available-for-sale
securities.......................................                 -          (180,140)         (93,362)           (207,090)
(Gain) Loss on sales of available-for-sale
securities.......................................                 -            (2,058)            (878)            (19,175)
Decrease (Increase) in government securities -
trading..........................................                 -        (1,313,046)         519,645             395,657
Decrease (Increase) in other assets..............           415,502           385,402           13,365             378,960
(Decrease) Increase in other liabilities.........          (252,196)        2,183,508          187,761            (179,977)
Absorption subject to the Approval of the Annual
Shareholders Meeting (*).........................        (1,358,193)                -                -                   -
Monetary loss....................................         1,566,180                 -                -                   -
Consumer price index adjustment
(CER)............................................        (1,616,489)
Unrealized foreign exchange gain.................          (512,421)                -                -                   -
                                                    ---------------    --------------    -------------    ----------------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES.......................................   Ps.    (928,196)   Ps.  2,549,725    Ps. 1,168,420    Ps.    1,386,956

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:

Decrease (Increase) in loans, net................         2,591,053         1,035,465       (1,137,685)         (2,442,776)
Sale of Galtrust I Securities....................                 -                 -          102,497                   -
Increase in investments in other companies.......                 -           (57,691)         (92,320)            (34,337)
Cash dividends and capital repayments of
available-for-sale securities....................                 -            50,646          121,563             319,696
Sales of investments in other companies..........                 -            59,394            3,655               4,889
Purchase of available-for-sale securities........                 -          (409,428)        (196,960)         (2,617,468)
Proceeds on available-for-sale securities........                 -           199,687          404,441           2,672,570
(Increase) Decrease in deposits at the Argentine
Central Bank.....................................           (18,825)        2,960,529         (605,554)         (1,918,570)
Additions to bank premises and equipment,
miscellaneous, and intangible assets.............            (63,724)         (421,064)        (112,773)           (279,940)
Proceeds of sales of premises and equipment......            85,191            41,518            9,115              23,726
                                                    ---------------    --------------    -------------    ----------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES.......................................   Ps.   2,593,695    Ps.  3,459,056    Ps.(1,504,021)    Ps.  (4,272,210)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Cash dividends...................................                 -           (81,101)         (17,803)            (76,166)
Capital increase.................................                 -            12,030              245                   -
Increase (Decrease) in deposits, net.............        (5,964,672)       (6,035,798)         352,026           1,950,919
Borrowings under credit facilities - long term...                 -         3,936,164          574,944             319,727
Payments on credit facilities - long term........           (48,334)       (2,937,641)        (540,703)           (126,921)
Increase (Decrease) in short-term borrowings, net         3,367,777        (1,050,400)         135,002             234,211
Decrease (Increase) in repurchase agreements.....         1,102,847           (76,526)        (180,737)            218,580
                                                    ---------------    --------------    -------------    ----------------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES.......................................   Ps.  (1,542,382)   Ps. (6,233,272)   Ps.   322,974    Ps.    2,520,350
</TABLE>

(*) Effect on the foreign currency position compensation.
The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-9
<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS ENDED
          DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

<TABLE>
<CAPTION>
                                                                       GRUPO GALICIA                          BANCO GALICIA
                                                     --------------------------------------------------     ----------------
                                                                                            SIX-MONTHS
                                                                                              ENDED            YEAR ENDED
                                                          YEARS ENDED DECEMBER 31,         DECEMBER 31,          JUNE 30,
                                                     --------------   ----------------    -------------     ----------------
                                                          2002              2001              2000                2000
                                                     --------------   ----------------    -------------     ----------------
<S>                                                  <C>              <C>                 <C>               <C>
INCREASE IN CASH AND CASH EQUIVALENTS NET
 (DECREASE).......................................   Ps.    123,117   Ps.     (224,491)   Ps.   (12,627)    Ps.     (364,904)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
 THE YEAR.........................................        1,130,003          1,354,494        1,367,121            1,731,076
MONETARY EFFECT ON CASH AND CASH EQUIVALENT.......         (681,267)                 -                -                    -
                                                     --------------   ----------------    -------------     ----------------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR..   Ps.    571,853   Ps.    1,130,003    Ps. 1,354,494     Ps.    1,366,172

SUPPLEMENTAL DISCLOSURES RELATIVE TO CASH FLOWS:
Interest paid.....................................   Ps.    816,261   Ps.    1,215,641    Ps.   681,259     Ps.    1,459,726
Income tax paid...................................                -             62,691           63,818              140,410
</TABLE>

The transfer of loans to the "Galtrust I" Financial Trust during the six-month
period ended December 31, 2000, amounting to Ps.968,358 and to the "Galtrust II,
III, IV and V" Financial Trusts during the year ended December 31, 2001 of
Ps.521,203, and the swap of government debt instruments into "Secured Loans"
amounting to Ps.2,332,799 did not require the movement of cash.

The amount of Ps.687,478 for the compensation, the amount receivable of
Ps.7,037,155, for the compensation to be received from the National Government
and the advance to be requested from the Argentine Central Bank for the
subscription of the Hedge Bond, for Ps.2,468,345 did not require the movement of
cash as well as the pesification effect due to Decree No.214/02.

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-10

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
    FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS ENDED
 DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

                                                                   BANCO GALICIA

<TABLE>
<CAPTION>
                                                                         ADJUSTMENTS
                                                                             TO            PROFIT RESERVES
                                                             PAID IN    SHAREHOLDERS'      --------------
                                            CAPITAL STOCK    CAPITAL       EQUITY         LEGAL        OTHER
                                            -------------  ----------   ------------   -----------   ---------
<S>                                         <C>            <C>          <C>            <C>           <C>
BALANCE AT JUNE 30, 1999                     Ps. 405,417   Ps.310,678   Ps.1,000,407   Ps. 296,222   Ps.   129

Distribution of retained earnings
Approved by the shareholders' meeting

  - Legal reserve                                      -            -              -        65,793           -
  - Reserve provided by the Bylaws                     -            -              -             -          15
  - Cash dividends                                     -            -              -             -           -
  - Stock dividends of capitalisation
     of profits                                   63,245            -         74,909             -           -
Net income for the year                                -            -              -             -           -
                                             -----------   ----------    -----------   -----------   ---------
BALANCE AT JUNE 30, 2000                     Ps. 468,662   Ps.310,678    Ps.1,075,316  Ps. 362,015   Ps.   144
                                             ===========   ==========    ===========   ===========   =========
</TABLE>

<TABLE>
<CAPTION>

                                               UNREALIZED                     TOTAL
                                               VALUATION       RETAINED    SHAREHOLDERS'
                                             DIFFERENCE (*)    EARNINGS       EQUITY
                                             --------------  -----------   ------------
<S>                                          <C>             <C>           <C>
BALANCE AT JUNE 30, 1999                       Ps.      -    Ps. 631,809   Ps.2,644,662

Distribution of retained earnings
Approved by the shareholders' meeting

  - Legal reserve                                       -        (65,793)             -
  - Reserve provided by the Bylaws                      -            (15)             -
  - Cash dividends                                      -        (76,166)       (76,166)
  - Stock dividends of capitalisation
     of profits                                         -       (138,154)             -
Net income for the year                                 -        341,477        341,477
                                               ----------    -----------   ------------
BALANCE AT JUNE 30, 2000                       Ps.      -    Ps. 693,158   Ps.2,909,973
                                               ==========    ===========   ============
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-11

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
    FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001, FOR THE SIX-MONTHS ENDED
          DECEMBER 31, 2000 AND FOR THE FISCAL YEAR ENDED JUNE 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002)

                                                                   GRUPO GALICIA

<TABLE>
<CAPTION>
                                                                         ADJUSTMENTS
                                                                             TO            PROFIT RESERVES
                                                             PAID IN    SHAREHOLDERS'  ------------------------
                                            CAPITAL STOCK    CAPITAL       EQUITY         LEGAL        OTHER
                                            -------------  ----------   ------------   -----------   ----------
<S>                                         <C>            <C>          <C>            <C>           <C>
BALANCE AT JUNE 30, 2000                    Ps.  543,000   Ps. 15,250   Ps.  661,203   Ps.   1,944   Ps. 40,279
Capital increase approved by
the extraordinary meeting of
shareholders-held on May
16, 2000 (*)                                     549,407       64,001        726,532             -            -
Net income for the six-month period                    -            -              -             -            -
                                            ------------   ----------   ------------   -----------   ----------
BALANCE AT DECEMBER 31, 2000                Ps.1,092,407   Ps. 79,251      1,387,735   Ps.   1,944   Ps. 40,279
                                            ============   ==========   ============   ===========   ==========
Distribution of retained
earnings approved by the
shareholders meeting held on
March 15, 2001
-Legal Reserve                                         -            -              -        14,181            -
-Reserve provided by the Bylaws                        -            -              -             -      196,597
-Cash dividends                                        -            -              -             -            -
Net income for the year                                -            -              -             -            -
                                            ------------   ----------   ------------   -----------   ----------
BALANCE AT DECEMBER 31, 2001                Ps.1,092,407   Ps. 79,251   Ps.1,387,735   Ps.  16,125   Ps.236,876
                                            ============   ==========   ============   ===========   ==========
Adjustment retained earnings
Distribution of retained
earnings approved by the
shareholders meeting held on
March 15, 2001
-Legal Reserve                                         -            -              -        13,113            -
-Reserve provided by the Bylaws                        -            -              -             -      251,208
-Cash dividends                                        -            -              -             -            -
Net income for the year
before the Absorption                                  -            -              -             -            -
ABSORPTION SUBJECT TO THE
APPROVAL OF THE ANNUAL
SHAREHOLDERS MEETING (*)                               -            -              -             -            -
Transfer to net income of the Absorption,
net                                                    -            -              -             -            -
Net income after the Absorption
                                            ------------   ----------   ------------   -----------   ----------
BALANCE AT DECEMBER 31, 2002                Ps.1,092,407   Ps. 79,251   Ps.1,387,735   Ps.  29,238   Ps.488,084
                                            ============   ==========   ============   ===========   ==========
</TABLE>

<TABLE>
<CAPTION>

                                             UNREALIZED                        TOTAL
                                             VALUATION       RETAINED      SHAREHOLDERS'
                                           DIFFERENCE (*)    EARNINGS         EQUITY
                                           --------------  -------------   -------------
<S>                                        <C>             <C>             <C>
BALANCE AT JUNE 30, 2000                               -   Ps.    87,229   Ps. 1,348,905
Capital increase approved by
the extraordinary meeting of
shareholders-   held on May
16, 2000 (*)                                           -               -       1,339,940
Net income for the six-month period                    -         196,401         196,401
                                            ------------   -------------   -------------
BALANCE AT DECEMBER 31, 2000                           -   Ps.   283,630   Ps. 2,885,246
                                            ============   =============   =============
Distribution of retained
earnings approved by the
shareholders meeting held on
March 15, 2001
-Legal Reserve                                         -         (14,181)              -
-Reserve provided by the Bylaws                        -        (196,597)              -
-Cash dividends                                        -         (70,753)        (70,753)
Net income for the year                                -         262,254         262,254
                                            ------------   -------------   -------------
BALANCE AT DECEMBER 31, 2001                Ps.        -   Ps.   264,353   Ps. 3,076,747
                                            ============   =============   =============
Adjustment retained earnings                                       6,521           6,521
Distribution of retained
earnings approved by the
shareholders meeting held on
March 15, 2001
-Legal Reserve                                         -         (13,113)              -
-Reserve provided by the Bylaws                        -        (251,208)              -
-Cash dividends                                        -               -               -
Net income for the year
before the Absorption                                  -      (2,816,986)     (2,816,986)
ABSORPTION SUBJECT TO THE
APPROVAL OF THE ANNUAL
SHAREHOLDERS MEETING (*)                       1,358,193               -       1,358,193
Transfer to net income of the Absorption,
net                                           (1,358,193)      1,358,193               -
Net income after the Absorption                        -      (1,458,793)     (1,458,793)
                                            ------------   -------------   -------------
BALANCE AT DECEMBER 31, 2002                Ps.        -   Ps.(1,452,240)  Ps. 1,624,475
                                            ============   =============   =============
</TABLE>

(*) Effect on the foreign currency position compensation.

   The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-12
<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

1.    BASIS OF PRESENTATION, ACQUISITIONS, ESTIMATES AND UNCERTAINTIES

Grupo Financiero Galicia S.A. ("Grupo Galicia", the "Company" or "the Group") is
a corporation organized under the laws of Argentina that acts as a holding
company for Banco de Galicia y Buenos Aires S.A. ("Banco Galicia" or the "Bank")
and its subsidiaries. Grupo Galicia was formed by the controlling shareholders
of the Bank on September 14, 1999 to consummate an exchange of shares with the
shareholders of Banco Galicia and establish Grupo Galicia as the Bank's holding
company. Grupo Galicia was formed with two classes of shares: Class A shares,
which are entitled to 5 votes per share, and Class B shares, which are entitled
to 1 vote per share. To effect the exchange, Grupo Galicia offered to exchange
Grupo Galicia Class B shares for all outstanding Banco Galicia Class B shares on
a 2.5-for-1 basis and to exchange Grupo Galicia ADSs for all outstanding Banco
Galicia ADSs on a 1-for-1 basis. The controlling shareholders retained all the
Class A shares. As a result of the exchange, which was consummated on July 26,
2000, the Company became holder of 93.23% of the Bank's capital stock, and the
remaining 6.77% remained as a minority interest in the Bank. At December 31,
2002 and 2001 the Company's interest in Banco Galicia was 93.59% as a result of
open market purchases.

The consolidated financial statements of Grupo Galicia include the financial
statements of the Bank, as the predecessor business for the year ended June 30,
2000 and the consolidated financial statements of Grupo Galicia as of December
31, 2002 and 2001 and for the six-month period ended December 31, 2000. The
initial retained earnings balance reflected in the statement of changes in
shareholders' equity at July 1, 2000, represents the participation of the
controlling shareholders in the earnings of the Bank, net of certain incomes and
expenses incurred by Grupo Galicia.

Banco Galicia is a private-sector commercial bank organized under the laws of
Argentina which provides general banking services, mainly through its Argentine
branches, to corporate and retail customers. As of December 31, 2001, Banco
Galicia provided banking services through its branches in the United States (New
York City) and Grand Cayman Island. As a consequence of the prolonged economic
crisis that Argentina was suffering, that worsened in December 2001, and of the
economic policy measures adopted by the government in 2002, the New York branch
was closed as of January 30, 2003. The Bank's services included, until December
31, 2001, accepting deposits and granting loans in Argentine pesos and U.S.
dollars. The end of the Convertibility regime in early 2002, the devaluation of
the currency and the measures adopted by the government in 2002 have restricted
Argentine banks' operations in U.S. dollars.

As a result of the political and economic crisis that Argentina experienced in
late 2001 and in 2002 and the material and adverse effect that such crisis has
had on the Bank and other financial institutions in Argentina, the Bank's future
business activities, as well as the levels of such business activities may
differ substantially at December 31, 2002 and 2001 as compaired with previous
periods.

Grupo Galicia consolidates the financial statements of Banco Galicia and its
subsidiaries and all entities over which it has direct or indirect control. The
consolidated financial statements also include Net Investment S.A. (and its
subsidiaries), Sudamericana Holding S.A. (and its subsidiaries), Banco Galicia
Uruguay S.A. (and its subsidiaries), Galicia Capital Markets S.A. (and its
subsidiaries), Galicia Factoring y Leasing S.A., Galicia Warrants S.A., Galicia
Valores S.A. Sociedad de Bolsa, AgroGalicia S.A., and Tarjetas Regionales S.A..
All significant intercompany transactions have been eliminated when
consolidating.

                                      F-13

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

As of December 31, 2001, Banco Galicia maintained the controlling interest in
Tarjeta Naranja S.A., Tarjeta Comfiar S.A., Tarjetas Cuyanas S.A. and Tarjetas
del Mar S.A., all regional-credit-card issuing companies through its subsidiary
Banco Galicia Uruguay S.A.

In the current year, as a result of Banco Galicia's capitalization, the Bank
took direct control of Tarjetas Regionales S.A..

The December 31, 2002 financial statements of Tarjetas Regionales S.A., which
were used for consolidation purposes, were previously consolidated with those of
Tarjeta Naranja S.A., Tarjetas Cuyanas S.A., Tarjeta Comfiar S.A. and Tarjetas
del Mar S.A., in which Tarjetas Regionales S.A. holds a controlling interest.

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities, as of the financial statement
dates, and the reported amounts of revenues and expenses during the reporting
periods. Since management's judgment involves making estimates concerning the
likelihood of future events, the actual results could differ from those
estimates, which will have a positive or negative effect on future period
results.

ARGENTINE ECONOMIC SITUATION AND ITS IMPACT ON GRUPO GALICIA'S ECONOMIC AND
FINANCIAL POSITION

Argentina is in an economic situation that is mainly characterized by a major
external debt burden, the government's default on most of its debt, a
devaluation of the peso of approximately 240% since December 2001, the lack of
available foreign or domestic credit both for the public and the private
sectors, high interest rates, a significant decline in the financial system's
deposit levels, country risk indicators far above normal averages and an
economic recession that has lasted more than four years. This situation has led
to a significant decrease in the demand for goods and services and a significant
rise in the level of unemployment and to a great deal of uncertainty as to how
and when the economic crisis will be stayed. In addition, this situation has led
to many measures proposed by the Argentine Government that have contributed to
an uncertain and unstable economic and financial system in the country. The
potential effects on the Company and its customers from this economic crisis and
from the related regulations of the Argentine Government causes there to be an
uncertainty as to whether or not the Company will be able to continue to operate
its business as a going concern. No adjustments have been made to these
financial statements that reflect the outcome of these uncertainties.

As from December 3, 2001, the Argentine Government issued measures designed to
restrict the free availability and circulation of cash and the transfer of
foreign currency abroad. Subsequently, the Argentine Government declared the
default of its external debt.

On January 6, 2002, the Argentine Government enacted Law 25,561 (Public
Emergency and Foreign Exchange System Reform Law, the "Public Emergency Law")
that involved profound changes to the prevailing economic model and the repeal
of the Convertibility Law in force since March 1991. On February 3, 2002, the
Argentine Government announced new economic measures through Decree No.214/02
(Restructuring of the Financial System), complemented by Decree No.410/02 dated
March 1, 2002 and Decree No.260/02 (Exchange Regime) dated February 8, 2002 and
Decree 905/02 dated May 31, 2002, substantially modifying some of the measures
implemented by the Public Emergency and

                                      F-14

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

Exchange System Reform Law. These decrees have been modified by other decrees
and complemented by regulations issued by various regulatory agencies and there
is uncertainty about future changes, given that some of them are still pending
issuance at the date on which these financial statements were prepared.

The impact generated by all these measures on the financial statements of the
Bank as of December 31, 2002 was recognized according to the evaluations and
estimates made at the date of preparing them. Actual results could differ from
those evaluations and estimates. Therefore, the financial statements of the Bank
may not report all the adjustments that could result from these adverse
conditions or from future amendments to the existing legal and regulatory norms.
Furthermore, at this time it is not possible to foresee the effect of future
development of the Argentina's economy or its consequences on the economic and
financial position of the Bank. Thus, any decision that must be made on the
basis of these financial statements must take into account the effects of these
measures and the financial statements must be considered in the light of these
uncertain circumstances.

Listed below are some of the measures adopted by the Argentine Government:

FOREIGN EXCHANGE SYSTEM

On January 6, 2002, the Executive Branch established a dual exchange rate
system, with an "official" market where the exchange rate was fixed at Ps.1.4
per US dollar for transactions subject to Argentine Central Bank approval and
for import and export transactions, and another exchange rate for all other
transactions that was to be freely determined by the market.

The remaining transactions relating to remittance or collection of foreign
currency to or from abroad would be carried out on the free market. The initial
exchange rate set for the official market was Ps.1.40 per U.S.$1. Quotations on
the free market would be set by supply and demand. On January 11, 2002 when the
foreign exchange market was opened, Banco de la Nacion Argentina published the
first quotation for the free market at Ps.1.60 per U.S.$1 (selling rate) and
Ps.1.40 per U.S.$1 (buying rate).

On February 8, 2002 the Argentine Government issued Decree No.260/02 (Exchange
Regime) establishing a single free foreign exchange market system as from
February 11, 2002, through which all transactions involving the exchange of
currency were to be carried at a rate of exchange to be freely agreed, observing
the requirements to be laid down by the Argentine Central Bank.

As of December 31, 2002, despite a certain easing of the restrictions imposed on
the foreign exchange market, the transfer of funds abroad to effect payments of
principal of debts of a financial nature by financial institutions continued to
require the prior approval of the Argentine Central Bank, except in the case of
new indebtedness corresponding to transactions executed through the free foreign
exchange market after February 2, 2002 and payment obligations with
international credit agencies. In May 2003, this prerequisite was eliminated for
financial institutions without financial assistance from the Argentine Central
Bank for liquidity reasons.

On January 27, 2003, the Argentine Central Bank released Communique "A" 3872 and
supplementary rules authorizing for 60 days the purchase of foreign currency for
amounts in excess of the current limit of US$ 150, provided it is used to settle
debts in arrears as of February 10, 2002 and for a maximum amount equivalent to
5% of the due and payable foreign debt. The foreign currency acquired for such
purpose is

                                      F-15

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

to be deposited in a trust and may only be released either to settle those debts
or to be traded on the exchange market with the prior approval of the Argentine
Central Bank.

In May 2003, the foreign exchange market regulations were further relaxed.
Effective May 6, 2003, through its Communique "A" 3944, the Argentine Central
Bank provided for an additional easing of restrictions regarding both foreign
trade and transfer of funds abroad.

LOANS TO THE NON-FINANCIAL PRIVATE SECTOR AND ASSETS UNDER FINANCIAL LEASES

a) Pursuant to the above mentioned Decree No.214/02, as from February 3, 2002,
all debts with the financial system denominated in U.S. dollars or any other
currency, except as mentioned in subsection b) below, whatever their amount and
nature, were converted into pesos at the exchange rate of Ps.1 per U.S.$1 or its
equivalent in other currency. Furthermore, as from February 3, 2002, an
inflation adjustment coefficient (known as "CER" and based on changes in the
consumer price index) and a maximum interest rate as determined by the Argentine
Central Bank was applied to these debts. Subsequently, decrees No.762/02 and
No.1242/02 established that the CER coefficient was to be replaced by an
adjustment coefficient based on the variation of salaries (known as "CVS") for
certain loans to individuals, namely residential mortgages on property
representing a borrower's sole family residence, personal loans up to Ps.12,000
and pledge loans up to Ps.30,000. The adjustment would be applicable beginning
October 2002.

Subsequently, Law 25,642 approved on September 11, 2002, postponed the
application of the CER coefficient to September 30, 2002, for all obligations of
individuals or companies for Ps.400,000 or less. In the case of debtors of
financial institutions, this amount will be considered on the basis of
indebtness in the financial system as a whole.

On January 9, 2003, Law 25713 was promulgated, which establishes modifications
to the application of the CER and CVS adjusting indexes to credit operations. On
that date, the National Executive Branch issued Decree 44/2003 leaving without
effect the exemption from CER established by that law for borrowers who have a
consolidated debt balance of less than Ps.100,000 in the financial system. The
various universes subject to each adjusting index after the modifications
introduced to legislation would be as follows:

Effective October 1, 2002, CVS shall be applied to:

- Mortgage loans secured by the sole family residence for an original amount
less than or equal to US$ 250,000, while those not falling after this exception
will be adjusted applying the CER.

- Consumer loans for amounts less than US$12,000.

- Pledge consumer loans for amounts less than US$30,000.

CER shall be applied to:

-    Loans which do not meet the conditions mentioned above. As established by
     the regulations published on January 9, 2003, all exceptions have been
     eliminated and the application of the adjusting indexes to all transactions
     subject to them being established as of February 3, 2002.

                                      F-16

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

The amounts collected as a result of the application of previous regulations are
to be reimbursed to customers, if necessary.

b) As established by Decree No.410/02, loans related to foreign-trade
transactions granted by financial institutions and the credit card balances
related to purchases made outside Argentina and obligations and contracts
subject to foreign law were not included in the conversion into pesos at the
rate of Ps.1 per U.S.$1 established by article 1 of Decree No.214/02 and
remained denominated in U.S. dollars.

As a consequence of the measures adopted by the Argentine Government, the Bank
continues to restructure its commercial loan portfolio according to the current
repayment ability of its customers.

PUBLIC SECTOR DEBT

Decree No.471/02 dated March 8, 2002, established that the obligations of the
national, provincial and municipal public sectors outstanding as of February 3,
2002, denominated in U.S. dollars or any other currency, governed only by
Argentine law, would be converted at an exchange rate of Ps.1.40 per U.S. dollar
or its equivalent in other foreign currency and adjusted applying the CER
coefficient. In addition, the obligations of the public sector converted into
pesos as explained in the previous sentence would accrue interest at rates
ranging from 2% to 5%, depending on the characteristics of the original debt. On
August 28, 2002, Decree No.1579/02 established a voluntary exchange of all
provincial government debt (including debt instruments that had been tendered in
the swap regulated by Decree No.1387/01 for exchange for Secured Loans) for new
national government bonds secured by 15% of the tax collection proceedings
shared by the federal and the provincial governments. The new bonds will be
peso-denominated, with a 16-year maturity, monthly capital amortization
beginning after a 3-year period on March 4, 2005, capital adjustment by CER, a
2% annual interest rate and will be negotiable in exchanges and securities
markets of Argentina. This exchange has not been completed yet.

The necessary steps concerning the swap of provincial debt were finalized in
March 2003. To date the swap has not been fully completed, as the provincial
legislative bodies are in the process of approving the agreements signed.

LOANS AND OBLIGATIONS OF THE FINANCIAL SECTOR

As established by Decree No.410/02, interbank loans in foreign currency
outstanding at February 3, 2002 were converted into pesos at a rate of Ps.1.40
per US$1 or its equivalent in other currencies, or at the single and free market
exchange rate, as determined by the Argentine Central Bank depending on the type
of operation. Through its Communique "A" 3507, the Argentine Central Bank
established that the only obligations excluded from this pesification would be
those originated in transactions with second-floor financial institutions in
order to finance or prefinance customers' import and export transactions and
expenses related to those transactions. These obligations would remain
denominated in foreign currency and would be payable at the free exchange rate.

DEPOSITS AND OBLIGATIONS WITH THE PUBLIC AND PRIVATE SECTORS

Under the terms of Decree No.214/02, as from February 3, 2002, deposits and
obligations in U.S. dollars or other foreign currencies in financial
institutions were converted into pesos at the exchange rate of

                                      F-17

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

Ps.1.40 per U.S.$1 or its equivalent in such other currency. Furthermore,
restrictions imposed in December 2001 on the availability of deposits (the so
called "corralito") were maintained for balances in peso-denominated current
accounts and savings accounts, with certain exceptions, and it was established
that time deposits both peso- and U.S. dollar-denominated and dollar-denominated
deposits in savings accounts and current accounts would be restructured and
returned to their owners in peso-denominated installments, with the amounts and
due dates depending on the balances recorded. This restructuring was regulated
by Resolution No.6/02 of the Ministry of Economy.

As from February 3, 2002, the CER coefficient and annual nominal interest rates
of at least 2% began to be applied to restructured deposits that were originally
dollar denominated, and those restructured deposits originated in
peso-denominated deposits began to accrue an annual interest rate of at least
7%. On March 13, 2002, Decree No.494/02 established, among others, that owners
of such deposits could opt to receive government bonds in substitution for them.

As per Resolution No.46/02 of the Ministry of Economy, depositors were offered
the option described in the preceding paragraph up to and including April 30,
2002. This date was postponed and this first exchange was substituted by another
one regulated by Decree No.905/02 passed on June 1, 2002, and complementary
rules. Decree No.905/02 established a mechanism pursuant to which any depositor
of restructured deposits and demand deposits, as well as all of those depositors
that participated in the voluntary exchange regime previously established by
Decree No.494/02, were initially given a 30-day option to exchange their
deposits for new Argentine Government bonds the terms of which are set forth in
Decree No.905/02. These were: a peso-denominated bond maturing in 2007 (Boden
2007) and two dollar-denominated bonds, maturing in 2005 and 2012 (Boden 2005
and Boden 2012), respectively. In the exchange that took place between July 16,
2002 and August 8, 2002, inclusively, approximately 24% of the financial
system's restructured deposits were tendered. In the case of Banco Galicia this
percentage amounted to approximately 36%.

Decree No.905/02 established that subscription by financial institutions of the
government bonds to be offered to depositors had to be carried in pesos, through
advances to be granted to them by the Argentine Central Bank. These advances had
to be fully secured by public and private sector debt instruments held by
financial institutions, in accordance to the provisions of article 15 of Decree
No.905/02 (which established the assets included and their order of preference),
except in the case of Boden 2012, which had to be acquired in the first place by
delivering 9% National Government Bonds maturing 2002 ("Bonos Encaje").

Additionally, Decree No.905/02 established that non-exchanged restructured
deposits would remain under the repayment schedule established by Resolution
No.6/02 of the Ministry of Economy, as amended, but would be registered by each
financial entity with the Caja de Valores S.A. ("Caja de Valores") and would
constitute publicly negotiable instruments (known as "CEDROs") listed in
self-regulated markets in Argentina. Holders of such certificates of
restructured deposits would be able to apply such certificates to subscribe for
initial public offerings of equity and debt securities authorized by the
National Securities Commission (the "CNV") and listed on a stock exchange.
Decree No.905/02 also established the possibility of using restructured deposits
to repay loans granted by the same financial institution where the deposits were
held, subject to the implementing regulations issued by the Argentine Central
Bank.

Through Decree No.1836/02 dated September 16, 2002, that was regulated by
Argentine Central Bank Communique "A" 3740, the Government announced a new
exchange of deposits for government bonds.

                                      F-18

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

The new exchange contemplates different options for holders of CEDROs or
depositors that might have participated in the previous exchange of deposits for
government bonds implemented by the government. Holders of CEDROs are able to
voluntarily exchange their certificates for dollar-denominated bonds maturing in
2013 (Boden 2013), that are secured by the financial institution in which the
deposit was made, and/or peso-denominated "Letras de Plazo Fijo" ("Time Deposit
Bills") to be issued by financial institutions and that include an option
granted by the Government to convert into U.S. dollars at the rate of Ps.1 per
each Ps.1.40 adjusted by CER, at each amortization and coupon due dates, the
amounts payable at those dates. The Time Deposit Bills have the same maturity as
the Boden 2013 and their principal will be adjusted by CER. The period to
exercise these options was initially set to expire on October 30, 2002, and was
postponed up to and including December 12, 2002 and, subsequently, up to and
including March 12, 2003. On March 11, 2003, Resolution No.146/03 of the
Ministry of Economy postponed the closing date of the Canje II by 90 working
days from the date previously established, until May 23, 2003.

In addition, Decree No.1836/02 established the possibility for holders of
restructured deposits of up to Ps.7,000 (excluding the CER adjustment) to
receive cash and allowed financial institutions to extend this possibility to
holders of restructured deposits of up to Ps.10,000 (excluding the CER
adjustment). Banco Galicia offered its customers this possibility.

Decree No.1836/02 opened the possibility for financial institutions to acquire
the government bonds to be delivered to depositors, in exchange for Secured
Loans and other public sector debt instruments held by financial institutions,
i-e, those included in art.15 of Decree No.905/02, with the preference there
established. The possibility of acquiring the government bonds to be delivered
to depositors through advances granted by the Argentine Central Bank secured by
the same assets mentioned in the previous sentence was maintained and the
possibility of acquiring such bonds in cash was added for those cases were the
amount of bonds to be delivered to depositors by a bank exceeds such bank's
holdings of assets eligible to be exchanged for bonds or given as collateral of
advances.

In addition Decree No.1836/02 allowed financial institutions to offer
dollar-denominated government bonds maturing in 2006 to depositors having
initiated judicial actions pending resolution, to recover their deposits.

Through its Resolution No.668/02 and effective December 2, 2002, the Ministry of
Economy eliminated the restrictions still in force on the amounts that
depositors were allowed to withdraw in cash from transactional deposit accounts
(current and savings accounts). These measures meant the lifting of the
"corralito."

On January 30, 2003 the Argentine Central Bank released Communique "A" 3875,
which established new conditions for the early reimbursement of rescheduled
deposits. Deposits may be reimbursed in advance provided that the financial
institution is not receiving financial assistance from the Central Bank, and its
liquidity ratios are not affected, at least in the short term. Financial
institutions receiving assistance from the Central Bank may only agree to offer
improved terms with the prior approval of the Superintendent of Financial and
Exchange Institutions, provided they repay principal amounts of that assistance
weekly, equivalent to the amount of the certificates of rescheduled deposits
reimbursed as a result of the improvements made in the preceding calendar week,
as established by Communique "A" 3877 dated February 6, 2003.

Continuing with the progressive freeing of restructured deposits ("corralon"),
through Decree No.739/03 of April 1, 2003, regulated by Argentine Central Bank's
Communique "A"3919, the Executive Power offered

                                      F-19

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

holders of such deposits the possibility to request from financial institutions
and the National Government, the reimbursement of their deposits, in conditions
that varied depending on the amount of the deposit and its original currency of
denomination. It established for restructured deposits of up to Ps.42 (US$30 as
of the date of the pesification), the repayment in cash and in pesos by
financial institutions of an amount equal to the pesified principal amount of
the original deposit adjusted by the CER plus interest, and the payment in
dollar-denominated bonds maturing in 2013 (Boden 2013) of the difference between
such amount and the amount in pesos equivalent to the original dollar amount of
the deposit at an exchange rate equal to Ps.2.99 per US dollar (the exchange
rate established for the transaction). For deposits of greater amounts, the
repayment would be done through a free time deposit maturing in 90 or 120 days,
depending on the restructured deposit amount. In the Bank's case, deposits for
$325 million (principal only) were presented for their freeing, while
restructured deposits decreased by $364 million equivalent to 45.3% of
restructured deposits as of March 31, 2003. This percentage is similar to that
of the financial system as a whole. Likewise, the Bank retained approximately
75% of the total of deposits originally constituted in dollars for up to US$30
(or $42) and in pesos.

The term set for exercising the options mentioned above expired on May 23,2003.

Decree No.410/02 provided that deposits made by foreign banks or financial
institutions with domestic financial institutions would not be converted into
pesos at the Ps.1 to US$1 exchange rate, as established by Decree No.214/02,
provided that they be transformed into lines of credit effectively maintained
and used for at least four years, in accordance with Argentine Central Bank
regulations. In addition, the conversion into pesos did not include those
obligations of the public and private sectors to grant sums of money in foreign
currency, which are governed by foreign laws.

OTHER ASSETS AND LIABILITIES

Decree No.410/02 established that futures and option contracts, including those
recorded in self-regulated markets and the accounts exclusively earmarked for
the operations on those markets would not be converted into pesos at the Ps.1 to
US$1 exchange rate as established by article 1 of Decree No.214/02. Decree
No.410/02 also established that:

a) Fiscal credit certificates issued in U.S. dollars or any other foreign
currency within the framework of Decrees No.979/01, No.1005/01 and No.1226/01
and outstanding at February 3, 2002, would be converted into pesos at the
exchange rate of Ps.1.40 per US$1 or its equivalent in any other foreign
currency.

b) The balances of accounts of financial institution in U.S. dollars or any
other currencies at the close of operations at February 1, 2002, which may be
computed to comply with legal reserve requirements, except for available
currency, would be converted into pesos at the exchange rate of Ps.1.40 per
U.S.$1.

Through Decree No.992/02, forward contracts and options entered into under
Argentine laws as of January 5, 2002, in which at least one of the parts is a
financial institution, were converted into pesos at the rate of Ps.1.40 per
U.S.$1.

                                      F-20

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

BANKRUPTCY PROCEEDINGS

On January 30, 2002, Law 25563 on bankruptcy proceedings was enacted, which
declared a production and credit emergency generated by the crisis affecting
Argentina, to last until December 10, 2003. Below is a description of some of
the measures adopted:

a) Suspension for 180 days as from the effective date of that Law, of all
mortgage, pledge and other foreclosures of whatever origin, including those
ordered in chapter 11 type of reorganization proceedings ("concursos"), whether
they be made extra judicially or in execution of judgment. (art.9 and 16)

b) Suspension for 180 days of the bankruptcy ("quiebra") petitions filed,
without prejudice to the possibility of applying the measures envisaged in
article 85 of Law 24522 (prior Bankruptcy Law). (art. 11)

c) Access to credit for individuals and companies in reorganization proceedings,
for which the Argentine Central Bank would proceed to regulate the elimination
of all restrictions and implement a rediscount line intended for those financial
institutions that would provide credit assistance to such individuals and
companies. (art.12)

d) Financial institutions governed by Law 21526 (Financial Institutions Law) and
supplementary rules would be granted a 90-day term to restructure their
receivables, outstanding as of November 30, 2001, from financial system debtors
through an agreement to be reached with each of them. (art. 15)

e) Suspension for 180 days of all precautionary injunctions and prohibition of
new ones, affecting property that is necessary for debtors to continue to carry
their usual business. All extraordinary acts of disposition of property on the
part of debtors would be null and void during the suspension period, unless
there is an express agreement by creditors. (art. 16)

On May 15, 2002, Law 25589 was enacted. Among other things, this Law repealed
the articles of Law 25,563 mentioned above and modified certain procedures
established by Law 24522 and Law 25563. Article 16 provisions were replaced by
the suspension for 180 days (subsequently this period was postponed) as from the
effective date of this Law of:

- Auctions of real estate property that involve the home of the debtor and/or
the goods and/or facilities used by the debtor in its commercial and/or
productive activities or for the provision of services, ordered in foreclosure
proceedings, in execution of judgments or in extrajudicial executions. Certain
debts were excluded such as debts of a food support nature or derived from labor
lawsuits;

-The execution of precautionary injunctions ordering the dispossession of
property used by commercial, industrial or similar establishments for carrying
out their business activities and necessary for them to operate.

In November 2002, when the 180-day suspension period expired, financial
institutions agreed with the Executive Branch on a temporary suspension of
foreclosures of security interests until the end of January 2003.

On February 4, 2003, Decree 204/2003 was issued, creating special emergency
units, which are responsible for mediating between debtors and creditors for a
term of 90 days commencing February 6, 2003.

                                      F-21

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

Those units, will operate within the jurisdiction of the Ministry of Labor and
the Ministry of Production, in cases where foreclosures of security interests
have been sought on individuals or small and medium-sized companies,
respectively, intervening at the request of debtors or creditors. Participation
is voluntary and does not mean the suspension or interruption of judicial
proceeding or extrajudicial foreclosures, as regulated by applicable rules.

These units still act as intermediaries for debtors and creditors .

On May 8, 2003, Congress approved a new law that suspended foreclosure
proceedings on real estate property constituting the home of debtors for a 90
working-day term beginning on the date of the promulgation of the law, which
occurred on June 3, 2003.

SUSPENSION OF THE APPLICATION OF SECTION 94, SUBSECTION 5 AND SECTION 206 OF LAW
19550 ON CORPORATIONS

Decree 1269/02 has suspended until December 10, 2003 the application of Section
94, subsection 5 of Law 19550 which establishes that a company must be dissolved
due to the loss of its corporate capital. Section 206, which establishes the
mandatory capital reduction when losses exceed reserves and 50% of the capital
has been suspended until that date

LEGAL ACTIONS REQUESTING PROTECTION OF CONSTITUTIONAL GUARANTEES

As a result of the measures adopted by the government, a significant number of
complaints have been filed against the national government and/or financial
institutions by individuals and legal entities claiming that those measures are
in breach of constitutional and other rights. The amounts that banks have had to
pay to comply with judicial orders that require that banks pay deposits in their
original currency of denomination (or the equivalent in pesos at the free
exchange rate) have been significant and currently represent the main source of
deposit loss for the financial system.

Decree No.214/02, as amended by Decree No.320/02, in turn amended and
complemented by the Public Emergency Law and Decree No.676/02 (both of them
published in the Official Gazette on April 26, 2002), applicable to all pending
lawsuits and precautionary measures pending execution, whatever the date of the
related court order may be, issued in judicial proceedings of whatever nature in
relation to credits, debts, obligations, deposits or rescheduling of financial
debts which may be deemed to be affected by the regulations of Law 25,561 and
regulatory and complementary rules, has regulated the method of proceeding in
those lawsuits and of admission and execution of provisional remedies that
decree, for any reason or title, the material delivery of the pledged assets to
the petitioner.

The government has attempted to stop judicial actions from continuing to erode
the financial system's deposit base. On April 25, 2002, Law 25,587 was passed by
Congress that prevents withdrawals from bank accounts based on legal actions
that have not resulted in a final judgement. In addition, on July 23, 2002,
Decree No.1316/02 was passed in order to suspend for 120 working days as from
the Decree's effective date the execution of judicial orders, whether based on
final judgements or not, associated to the recovery of deposits. These measures
have restricted but not completely eliminated the reduction in bank deposit
bases due to legal actions.

                                      F-22

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

Article 17 of Decree No.1836/02 dated September 16, 2002, allowed financial
institutions to offer dollar-denominated government bonds maturing in 2006 for
the total or partial settlement of claims of holders of restructured deposits
having initiated judicial actions, pending resolution as of the Decree's
effective date, to recover their deposits and that might have given place to
precautionary measures. The acceptance of the bonds by depositors is voluntary.

Financial institutions have requested from the government that they be
compensated for the losses arising from the payment of deposits pursuant to
judicial actions, as explained above, at the free market exchange rate, at
values higher than the Ps.1.4 per U.S.$1 established by government regulations
for the conversion of bank assets and liabilities into pesos. As of the date of
these financial statements, the government has not addressed this issue yet.

On March 5, 2003, the Argentine Supreme Court (the "Supreme Court") ruled on the
lawsuit of the Province of San Luis against the Argentine Federal Government,
concerning the claim of the reimbursement, in dollars or in pesos for an amount
equivalent to the dollar amount at the free exchange rate, of a pesified
dollar-denominated deposit that the Province of San Luis holds at Banco de la
Nacion Argentina. In its ruling, the Supreme Court declared art. 2 of Decree
No.214/02 unconstitutional (the article that had pesified the dollar-denominated
deposits outstanding in the Argentine financial system) and ordered Banco de la
Nacion Argentina to reimburse the Province of San Luis' deposit in dollars or in
pesos for an amount equivalent to the original dollar amount at the free
exchange rate. In its ruling, the Supreme Court established a 60-day term for
the parties to convene or determine the manner and the terms of the
reimbursement of the deposit. Since the parties were unable to reach an
agreement within the established period, the issue will be resolved by the
Supreme Court, which is pending at the date hereof.

As of April 30, 2003, court orders received by Banco de Galicia y Buenos Aires
S.A. mandating the reimbursement of deposits in their original currency of
denomination or at the free exchange rate amounted to Ps.14 million and U.S.$474
million. At that date, in compliance with court orders requiring the
reimbursement of deposits under penalty of search and/or seizure and/or crimes
involving illegal retention of deposits and/or contempt, the Bank had paid the
amounts of Ps.662 million and US$ 89 million for the reimbursement of deposits
in pesos and foreign currency.

As of the date of these financial statements, the Argentine Supreme Court is
expected to rule on certain cases that will set up its final position regarding
the constitutionality of the conversion of dollar-denominated deposits into
pesos and the access restrictions imposed by the government to depositors.

The Supreme Court's ruling did not apply to individual depositors, and
therefore, did not have an immediate effect on the financial system as a whole.
The Supreme Court has not ruled on lawsuits concerning individual depositors. If
the Supreme Court ruled favorably to the re-dollarization of restructured
deposits currently outstanding in the financial system, the government could
take measures to compensate financial institutions for the re-dollarization of
their restructured deposits or, alternatively, could establish a compulsory
exchange of these deposits for dollar denominated government bonds.

Meanwhile, the Government established the aforementioned freeing of the
restructured deposits ("corralon") which have not been exchanged for government
bonds in the different exchanges implemented in the past net of the amounts
already paid back in accordance with the repayment schedule defined by the
Ministry of Economy. Decree No.739/03 (published in the Official Gazette on
April 1, 2003) established, for restructuring of deposits. For
dollar-denominated deposits of up to Ps.42 (US$30 as of the date of the

                                      F-23

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

pesification), the decree permitted the demand of repayment in cash of an amount
equal to the pesified principal amount of the original deposit adjusted by the
CER plus interest. For pesos-denominated deposits, the deposit holder could
request that the technical value of the CEDROs, as of the payment date, be
credited to a demand account. For dollar-denominated deposits of amount greater
than Ps. 42, the repayment would be done through a free time deposit maturing in
90 or 120 days, depending on the restructured deposit amount.

For any of the above mentioned deposits, the National Government will repay,
through the issuance of dollar-denominated bonds maturning in 2013 (Boden 2013),
the difference between the nominal amount of the deposit principal adjusted by
the CER and the equivalent in pesos of the original dollar amount of the deposit
at an exchange rate of Ps.2.98 per US dollar (the exchange rate established for
the transaction).

Approximately 46.6% of elegible deposits in the financial system participated in
this transaction, reducing the principal to approximately Ps.8 billion
(approximately US$2,7 billion), the restructured deposits remaining in the
system.

Even though this measure reduced the probabibility of new demands being filed by
depositors, there is still a possibility that new demands may be filed impacting
the financial conditions of the financial institutions pursuant to judicial
actions already filed. These measures also raise an uncertainty about the future
decision of large depositors about whether or not to keep their 90- and 120-days
free time-deposits whithin the financial system when they mature, a decision
that could affect the system's deposit base in the near future.

COMPENSATION TO BE GRANTED TO FINANCIAL INSTITUTIONS

For the "asymmetric pesification" and its consequences

As provided for the Public Emergency Law and Decrees No.214/02, No.320/02,
No.410/02, No.471/02, No.704/02, No.905/02 and No.992/02 and complementary ones,
and Argentine Central Bank Communiques "A" 3467, 3507, 3561 and 3648 and
complementary ones, a significant portion of banks' assets and liabilities
denominated in foreign currency, which formed part of banks' net asset positions
in foreign currency were converted into pesos at different exchange rates.

Decree No.214/02 provided for the compensation, through the issuance by the
government of a bond to be delivered to financial institutions, of the losses
that financial institutions would otherwise suffer as a result of the conversion
of bank assets and liabilities into pesos at different exchange rates, the short
foreign currency positions that resulted from such conversion and the
devaluation of the peso. Decree No.494/02 established a methodology for the
calculation of the amount of compensation and established that the government
objective in providing such compensation was to cause financial institutions'
shareholders' equity to return to the levels prior to the pesification, by
compensating:

- the losses caused by the conversion into pesos of a significant portion of
their liabilities at the Ps.1.40 per U.S. dollar, greater than the exchange rate
of Ps.1 per U.S. dollar established for the conversion into pesos of a
significant portion of its dollar-denominated assets. This would be achieved
through the issuance and delivery of a peso-denominated Compensatory Bond
maturing 2007 (Boden 2007).

- the currency mismatch generated by the compulsory pesification of different
portions of financial institutions' assets and liabilities. This would be
achieved through the conversion of the originally peso-

                                      F-24

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

denominated Compensatory Bond into a dollar-denominated Compensatory Bond and,
if necessary, through the subscription of a dollar-denominated Hedge Bond. For
this the government established the issuance of dollar-denominated bonds
maturing in 2012 (Boden 2012).

On June 1, 2002, the Argentine government passed Decree No.905/02 that replaced
the provisions of Decree No.494/02 related to the methodology by which to
calculate the amount of compensation to be received by financial institutions.
Decree No.905/02 provided that the compensation to which a financial institution
was entitled to, would be calculated by taking into account the imbalances
generated by the government's pesification measures in the balance sheet of such
financial institution's headquarters and branches located in Argentina as of
December 31, 2001, limiting the provision of compensation on account of
imbalances generated in the balance sheets of such institution's foreign
branches and subsidiaries and local subsidiaries with complementary activities,
exclusively to the effects of the conversion into pesos of such foreign
branches' and subsidiaries' investments in Secured Loans. Therefore, the
negative impact of the pesification of the private-sector assets of the Bank's
foreign branches and subsidiaries (New York and Cayman branches and Galicia
Uruguay) and local subsidiaries with complementary activities (mainly Tarjetas
Regionales S.A. and Galicia Capital Markets S.A.), subject to Argentine Law,
remained excluded from the compensation scope.

Argentine Central Bank's Communique "A" 3650 established the regulations
necessary to implement the provisions of Decree No.905/02 in connection with the
compensation of the negative effects of the conversion into pesos at different
exchange rates of financial institutions' assets and liabilities and the
resulting foreign currency mismatches left in their balance sheets. Argentine
Central Bank's Communique "A" 3654 established July 29, 2002 as the last date on
which financial institutions had to inform, to the Argentine Central Bank, the
amounts of compensation to which they were entitled to, in accordance with the
regulations in force at the moment. Banco Galicia complied with this
requirement. However, subsequently, the Argentine Central Bank issued Communique
"A" 3716, which modified such regulations and originated a new presentation to
the Argentine Central Bank on September 16, 2002. For the Bank, the amount of
compensation determined in accordance with the regulations in force at that time
amounted to US$787.5 million (Compensatory Bond) and U.S.$618.2 million (Hedge
Bond).

On October 28, 2002, Decree No.2167/02 was issued which modified Article 29 of
Decree No.905/02 by incorporating into the calculation of the compensation
amounts the private-sector assets and liabilities recorded in foreign branches
and subsidiaries which were subject to the pesification provisions of Decree
No.214/02 and complementary ones, but did not contemplate any modification
regarding assets engaged in activities. Through Communiques "A" 3805 and "A"
3825, the Argentine Central Bank ruled the amendments of Decree 2167/02 , by
establishing a new reporting requirement, requiring financial institutions to
report, prior to December 23, 2002, the compensation to which they were entitled
under the new rules.

Variations in the compensation amounts due to the application of the latter
decree and the above-mentioned Argentine Central Bank Communiques have been
recognized in these financial statements. The total amount of the compensation
approximates US$2,254,027. This amount may be subject to changes arising from
amendments to regulations or from presentations by customers under the terms of
Communique "A" 3561 and supplementary rules, and is subject to the review and
approval of the Argentine Central Bank. Furthermore, the Bank has submitted a
letter to the Central Bank requesting authorization for the transfer of
securities for an amount equivalent to the net effect of the compensation
received

                                      F-25

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

for the subsidiary Banco de Galicia Uruguay S.A., which is estimated at
US$435,000 (face values of Boden due 2012) as of December 31, 2002.

As of December 31, 2002, amounts in connection with the government's
compensation includes:

The Ps.687,478 for the compensation received was recorded in Government
securities Holdings in an investment account securities, and the amount
receivable of Ps.7,037,155, in "Other receivables resulting from financial
brokerage - Compensation to be received from the National Government."

The advance requested to the Argentine Central Bank for the subscription of the
Hedge Bond, including the effect of Decree 2167/02, amounting to Ps. 1,725,072
in 2002 was recorded in "Other liabilities resulting from financial brokerage -
Argentine Central Bank - Other". At December 31, 2002, the Hedge Bond liability
with the Argentine Central Bank amounted to Ps.2,468,345 including CER and
accrued interest.

The portion of the Bank's compensation received to cover the positive difference
between the Shareholders' Equity as of December 31, 2001 and that resulting from
adjusting the net foreign currency position at that date converted into pesos at
the exchange rate of $1.40 per US dollar, for Ps.1,451,285, stated in the
year-end currency value, was reflected in the "Unrealized valuation difference"
account, in the Shareholders' Equity, as provided for by Argentine Central Bank
Communique "A" 3703. This criterion differs from professional accounting
standards. Therefore, should the latter have been applied, the loss for the
fiscal year -before the absorption envisaged in Communique "A" 3800 in Banco
Galicia, would have decreased by that amount. The impact on Grupo Galicia's
financial statements amounted to Ps.1,358,193 as of December 31, 2002. The
conditions for financing the subscription of the " National government bonds in
US dollars accruing interest at Libor 2012" have been specified in Section 29,
subsection g of Decree 905/02 and contemplates the delivery by financial
institutions of assets as security for at least 100 % of the advance received.

For the "asymmetric indexation" and legal actions related to the payment of
deposits

In addition, financial institutions have requested to the government to be
compensated for the losses generated to them by: 1) the payment of deposits
pursuant to judicial orders at the free market exchange rate, which was greater
than that established by the government for conversion into pesos of included
financial institutions' assets and liabilities, and 2) the adjustment for
inflation of included assets and liabilities by using different coefficients
(CER vs. CVS) ("asymmetric indexation"). As of the date of issuance of these
financial statements, the authorities have not taken any measures to compensate
these issues. As previously mentioned, the Bank has presented several letters
before the Ministry of Finance and the Argentine Central Bank addressing the
need to deal with this situation.

Currently, a law project is at the consideration of Congress that contemplates
to compensate financial institutions for the effects of the economic policy
measures or facts generated by these measures described in the paragraph above.
At the date hereof this project remains under discussion by Congress.

The difference between the amount paid as a result of the above-mentioned
measures and the amount resulting from converting deposits at $1.40 per US
dollar, adjusted by applying the CER and interest accrued at the payment date,
has been recorded in "Other receivables resulting from financial brokerage". As
of December 31, 2002, that difference amounted to Ps.442,895. As of March 31,
2003 it has been recognized in Intangible Assets, as called for by Argentine
Central Bank Communique "A" 3916.

                                      F-26

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

DEFERRAL OF THE DEDUCTION OF THE EXCHANGE DIFFERENCE FOR INCOME TAX PURPOSES

Foreign exchange losses caused by the devaluation of the peso on foreign
currency assets and liabilities existing at the date of enactment of the Public
Emergency Law and supplemental decrees (January 6, 2002) shall only be
deductible from income tax in the proportion of 20% per annum in each of the
first five fiscal years ending after the effective date of the Law.

TREATMENT ACCORDED TO EXTRAORDINARY ASSISTANCE GRANTED TO FINANCIAL INSTITUTIONS
BY THE ARGENTINE CENTRAL BANK.

On March 28, 2003 the Argentine National Government issued Decree 739/03, which
among other things, established the methodology to pay the advances received
from the Central Bank.

On April 30, 2003, the Central Bank issued Communique "A" 3940 which ruled the
Banks with outstanding advances from the Central Bank and with outstanding
foreign debt to be refinanced. Based on this ruling, the Bank should submit a
refinancing program for its foreign debt to the Central Bank for its approval
before December 5, 2003. At the date of the issuance of these financial
statements the Bank had not complied with this requirement.

In addition, the Central Bank issued Communique "A" 3941, covering the
methodology to be followed by banks to repay the advances received from the
Central Bank. In the Bank's case, the maturities of the Central bank advances
will be matched with the current oustanding loans granted by the Bank to the
National and Provincial government. The basic criterion of such methodology
consists in balancing the cash flow and maturities of such government debtors
with the Central Bank as creditor without exceeding 70 monthly instalments.

Lastly, on May 22, 2003, the Argentine National Government issued Decree 1262/03
which among other things appointed a new committee in-charge of complete the
restructuring of the financial System ("Unit for the Restructuring of the
Financial System"). Additionally, such Decree amended the above-mentioned
instalments from 70 a maximum of to 120 months, if certain conditions are met.

SITUATION OF THE BANK

The situation described above affected Banco Galicia resulting in a lack of
liquidity due to the significant decrease in deposits forcing the Bank to
request financial assistance from the Argentine Central Bank.

As of April 30, 2003, the amount of deposits with Banco de Galicia y Buenos
Aires S.A. in Argentina was approximately Ps.3.614.183, whereas the assistance
received from the Argentine Central Bank to cover the temporary lack of
liquidity amounted to Ps. 5.576.540.

GALICIA LIQUIDITY AND CAPITALIZATION PLAN

On March 21, 2002, the Bank submitted to the Argentine Central Bank the "Galicia
Capitalization and Liquidity Plan (the "Plan"). The pillars of the Plan were the
immediate restoration of the Bank's liquidity through the provision of cash in
an amount sufficient to allow the Bank to reimburse a significant portion of its
demand deposits without having to request financial assistance from the
Argentine Central Bank; and a subsequent significant increase in its
capitalization. The Plan also contemplated the undertaking of nego-

                                      F-27

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

tiations with foreign creditors in order to restructure the Bank`s external
debt, the orderly wind down of the Bank's operating units abroad, and the
streamlining of the Bank's organization and administrative expenses in order to
adapt its operations to a level of activity that is lower than that experienced
in the recent past. The Plan included the temporary exemption from compliance
with certain technical ratios and the reduction of the charges or fines arising
from any non-compliance incurred or to be incurred, before implementing the Plan
and during its implementation, pursuant to the provisions of Law 21526
(Financial Institutions Law). The Plan was approved, by the Board of Directors
of the Argentine Central Bank, on May 3, 2002, through its Resolution No.281.

LIQUIDITY

Initially the improvement in the Bank's liquidity was a result of:

- The securitization (and/or sale) of the Bank's mortgage and commercial loan
portfolio for a total amount of Ps.400 million (in current pesos of May 2002),
through the transfer of loans to, or the creation of trusts subscribed by,
domestic financial institutions during April 2002.

- A loan from the Deposit Insurance Fund ("Fondo de Garantia de los Depositos")
for the U.S. dollar amount equivalent to Ps.200 million (in current pesos of May
2002) at the exchange rate prevailing on the day prior to that of the
disbursement (US$64.5 million), with a five-year term and an interest rate equal
to the 180-day LIBOR rate plus 300 basis points.

- A loan from the Fiduciary Fund for the Assistance to Financial Institutions
and Insurance Companies ("Fondo Fiduciario de Asistencia a Entidades Financieras
y de Seguros") for the US dollar amount equivalent to Ps.100 million (in current
pesos of May 2002) at the exchange rate prevailing on the day prior to that of
the disbursement (US$32.3 million), with a three-year term and an interest rate
equivalent to the 180-day LIBOR plus 400 basis points, with a floor of 8.07%.

In addition, a Ps.574 million (in current pesos of May 2002) loan from the Bank
Liquidity Fund ("Fondo de Liquidez Bancaria") was restructured by extending its
maturity to three years. This loan was canceled after the implementation of the
Plan, by means of an advance from the Argentine Central Bank.

After the above mentioned initial infusion of cash, and in the context of the
renegotiation of its external debt, between the implementation of the Plan and
the date of these financial statements, the Bank has not required any financial
assistance from the Argentine Central Bank.

NEW YORK BRANCH AND REPRESENTATIVE OFFICES ABROAD

The wind down of the Bank's operating units abroad included the "New York Branch
Restructuring Plan", which was submitted to the U.S. Treasury's Office of the
Comptroller of the Currency ("OCC") on March 22, 2002.

At the date of these financial statements, the New York Branch had concluded the
restructuring of all its obligations with third parties and closed its
operations.

The restructuring of the New York Branch's debt consisted in rescheduling its
commercial debt amounting to US$51,000 in the short term paying 20% of it in
cash and transferring the remaining 80% to the Head

                                      F-28

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

Office of the Bank in Argentina. At the date of these financial statements the
total amount of that debt had been settled. Also, of the total financial debt of
approximately US$237,000, of which US$ 200,000 had been instrumented as two
bonds of US$ 100,000 each, US$ 125,500 was rescheduled at the Head Office for a
term of 5 years, with a grace period of 2 years, US$ 68,900 was paid in cash and
US$42,600 was forgiven. Of total deposits of US$30,000, the Branch paid in cash
deposits for lower amounts totaling US$12,500, and rescheduled US$17,000 at the
Head Office. The rest of the obligations and contingencies for letters of credit
were transferred to the Head Office.

Furthermore, within the framework of this Plan, the offices in Sao Paolo
(Brazil) and London (United Kingdom), as well as Galicia y Buenos Aires
Securities (UK) Ltd., the company controlled by the Bank and organized in the
United Kingdom, were closed down.

CAPITALIZATION

The Plan contemplates an increase in the Bank's capitalization, within the
framework of the restructuring of the Bank's debt with its foreign creditors.
The Plan considers the addition of basic and/or complementary capital through
the subscription by foreign creditors of ordinary shares or subordinated debt,
whether or not convertible into ordinary shares, at the option of the
participants.

COST REDUCTION

Within the Plan's measures, the Bank made significant progress in the
streamlining of its organizational structure and of its administrative expenses
in order to adapt to the new economic and regulatory context of fiscal year
2002. For this, during 2002, the Bank reduced both its branch network and its
staff level through a voluntary mechanism, and renegotiated all rental
contracts, contracts with suppliers of systems, communication and other
services. As a result, during fiscal year 2002, the Bank (on an unconsolidated
basis) achieved savings of administrative expenses, excluding restructuring
charges, of approximately Ps.330 million, as compared with the previous year's
administrative expenses, representing a 34% decrease in real terms.

RESTRUCTURING OF THE HEAD OFFICE AND THE CAYMAN BRANCH DEBT

On June 12, 2002, the Bank announced the restructuring of all of the debt with
foreign creditors of the Bank's Head Office in Argentina, which includes
U.S.$200 million in principal amount of negotiable obligations maturing in 2003.
At the same time, the Bank announced that it had hired an international
investment bank as advisor in the process.

With respect to the restructuring of the Head Office's and the Cayman Branch's
foreign debt, the Bank has formally began negotiations with a steering committee
that was recently established by the Bank's largest creditors. The Bank is
currently progressing in the restructuring process and the definition of a
repayment proposal.

The restructuring of the Bank's external debt is a complex process due to the
amount, number of creditors and variety of debt instruments involved. In
addition, the process is complicated by the uncertainty prevailing in Argentina
in the political, economic and regulatory fields. This uncertainty has been
especially detrimental for the financial system, that was particularly affected
by the economic policy of the current administration.

                                      F-29

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

BANCO GALICIA URUGUAY S.A. AND BANCO DE GALICIA (CAYMAN) LTD.

Galicia Uruguay

The developments in Argentina, and most importantly the establishment of access
restrictions to deposits in December 2001, resulted in the deterioration of the
public's confidence in Argentine banks and impacted negatively on depositors'
confidence in Galicia Uruguay, prompting a massive run on Galicia Uruguay's
deposits beginning in mid-December 2001.

On February 6, 2002, Galicia Uruguay submitted a letter to the Central Bank of
Uruguay informing it of its temporary lack of liquidity situation, which
prevented it from continuing to face the withdrawal of deposits, and requesting
financial assistance in order to preserve its ability to reimburse all of its
deposits in an orderly manner and face the withdrawals, or the authorization to
temporarily suspend its activities.

On February 13, 2002, the Central Bank of Uruguay resolved to appoint an
intervener to oversee Galicia Uruguay's management and authorized the total
suspension of its activities for a 90-day period, which was extended
subsequently for an additional 60-day period. On June 10, 2002, Galicia Uruguay
submitted to the Central Bank of Uruguay a proposal to restructure its
liabilities. The proposal consisted of an initial cash payment in dollars
equivalent to 3% of the credit balance of each creditor and, for the remaining
balances and, at the creditors election, a time deposit or negotiable
obligations issued by Galicia Uruguay, both maturing on September 2011, with
principal amortization in nine annual installments (the first two for the 15% of
the remaining balance and the following ones for 10% of such balance) and a 2%
annual interest rate. On June 18, 2002, the Central Bank of Uruguay informed the
Bank that it would not oppose any restructuring solution that the Bank would
agree with Galicia Uruguay's depositors, subject to the proposal being accepted
by at least 75% of the depositors. This percentage coincides with the minimum
required by the Uruguayan Law to validate an extrajudicial agreement. On June
20, 2002, the Bank informed the Central Bank of Uruguay that it was offering a
pledge of Galicia Uruguay's commercial loan portfolio as guarantee of the
restructuring proposal presented on June 10, 2002.

The proposal was accepted by 7,067 account holders representing more than
U.S.$930 million in deposits over a total of U.S.$1,176 million held in 12,271
accounts. Measured in terms of balances, this represents a percentage of
acceptance of more than 79%.

On August 26, 2002, the judge in charge of the Court of Montevideo that oversees
the case, accepted the steps taken by Galicia Uruguay in reaching an
extrajudicial agreement and granted it a provisional moratorium that will extend
until the end of the process. In addition, the Central Bank of Uruguay was
designated by the above mentioned Court to verify that the legal majority had
been obtained in the agreement. Such verification was satisfactorily concluded.

On December 23, 2002, the Court of Montevideo hearing the case approved the
reorganization plan requested by Galicia Uruguay. In accordance with a
resolution adopted by the Central Bank of Uruguay, as of January 9, 2003,
Galicia Uruguay implemented a payment program, which contemplates the
reimbursement of 100% of deposits in US dollars plus interest to investors. As
agreed, the first step consists of an initial payment of 3% in cash to each
holder of time, savings account and demand deposits as of February 13, 2002, as
well as the delivery of transferable rescheduled time deposit certificates, as
the case may be, issued by Galicia Uruguay.

                                      F-30

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

On January 9, 2003, Galicia Uruguay began the payment of the first installment
contemplated by the extrajudicial agreement.

Banco Galicia (Cayman) Ltd.

Galicia Uruguay's situation has affected its subsidiary Banco Galicia (Cayman)
Ltd. As a consequence, on July 19, 2002, at the request of said subsidiary, the
Cayman Islands authorities have designated a provisional liquidator in order to
allow a voluntary debt restructuring agreement to be reached between this
subsidiary and its creditors. The restructuring of the liabilities of Banco
Galicia (Cayman) Ltd., is currently in process.

In May 29, 2003 the proposal for the restructuring of its liabilities made to
creditors was submitted before the Cayman Islands' Court.

Impact of Decree No.214/02 and complementary ones

The devaluation in Argentina and the "asymmetric pesification" of a portion of
Galicia Uruguay's loans that were denominated in U.S. dollars but subject to
Argentine Law, materially and adversely affected Galicia Uruguay's financial
condition. As mentioned, this impairment was caused by the fact that Decree
No.905/02 excluded from the calculation of the amounts of Compensatory and Hedge
Bonds to which the Bank would be entitled the private-sector pesified assets
held by the Bank's controlled companies with complementary activities and its
foreign branches and subsidiaries. Decree No.2176/02 complemented the
compensation calculation, by including in such calculation the private-sector
assets held by foreign branches and subsidiaries.

In this context, the Bank has undertaken with Galicia Uruguay to take such
necessary action in order to, in certain circumstances and with the prior
consent of the Argentine Central Bank, make contributions to Galicia Uruguay
that may be required to permit Galicia Uruguay to repay all of its restructured
deposits. Such undertaken was subsequently amended by both parties to clarify
that the direct and indirect legal effects resulting from the representations
and obligations set forth in such undertaking and the enforceability of the
rights assumed thereunder are subject to the prior restoration of the economic
condition of the Bank and the repayment in full of any financial assistance
provided by the Argentine Central Bank to the Bank. Management's intention is to
continue the operations in Ururguay.

2.    SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and financial statements presentation conform to the
rules of the Central Bank of the Republic of Argentina (the "Argentine Central
Bank") which prescribes the generally accepted accounting principles for all
banks in Argentina (the "Argentine Banking GAAP") that differs in certain
respects from generally accepted accounting principles of Argentina applicable
to enterprises in general ("Argentine GAAP") (see note 38).

Certain of the required disclosures of the Argentine Central Bank have not been
presented herein since they are not material to the accompanying financial
statements. In addition, certain presentations and disclosures including the
statement of cash flows have been included in the accompanying financial
statements to comply with the Securities and Exchange Commission's regulations
for foreign registrants.

The consolidated financial statements of Banco Galicia as of December 31, 2001
have been adapted to the same period of time of Grupo Galicia S.A. financial
statements.

                                      F-31

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
            (Expressed in thousands of constant Argentine pesos as of
                      December 31, 2002, except as noted)

The following is a summary of significant policies followed in the preparation
of the consolidated financial statements.

2.1      UNIT OF MEASUREMENT

The financial statements corresponding to the Argentine operations have been
adjusted for inflation up to August 31, 1995. As from that date, in line with
professional accounting standards and the regulatory bodies, the financial
statements have been prepared without recognizing the changes in the purchasing
power of the currency up to December 31, 2001. In line with Argentine Central
Bank Communique "A" 3702, Resolution 240/02 of the Argentine Federation of
Professional Councils in Economic Sciences (F.A.C.P.C.E.) and Resolution 415/02
of the National Securities Commission, the recognition of the effects of
inflation has been resumed in these financial statements since January 1, 2002.
For comparative purposes prior periods presented have been restated applying the
WPI rate from the period January 1, 2002 to December 31, 2002 (approximately
118.44%).To this end, the restatement method established by that Communique,
which is in accordance with the guidelines of Technical Pronouncement No. 6 of
the F.A.C.P.C.E. has been followed, considering that the accounting measurements
originated prior to December 31, 2001 are stated in the currency value as of
that date.

On March 25, 2003, Decree 664/03 rescinded the requirement that financial
statements be prepared in constant currency, effective for periods on or after
March 1, 2003 and, on April 8, 2003, the Argentine Central Bank issued the
Communique "A" 3921 and the CNV issued resolution No. 443/03 discontinuing
inflation accounting as of March 1, 2003.

2.2      FOREIGN CURRENCY

Foreign currency is stated at the U.S. dollar rate of exchange set by the
Argentine Central Bank, prevailing at the close of operations on the last
business day of each month.

Assets and liabilities valued in foreign currencies other than the US dollar
will be converted into U.S.$ using the swap rates communicated by the Argentine
Central Bank's operations desk.

As established by professional standards and regulations prevailing in
Argentina, the Bank recognized the effects of the devaluation of the Argentine
peso as of January 1, 2002.

2.3      GOVERNMENT AND CORPORATE SECURITIES

Government securities mainly represent obligations of the Argentine and U.S.
governments. Corporate securities included in this caption consist of quoted
corporate equity securities and quoted debt securities. Corporate equity and
debt securities are considered as held for trading purposes.

Realized and unrealized gains and losses on sales and interest income on
government and corporate securities are included as "Net income from government
and corporate securities" in the accompanying income statements.

                                      F-32

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

VALUATION OF GOVERNMENT SECURITIES UNDER ARGENTINE BANKING GAAP

Through its Communique "A" 2266 of November 1994, the Argentine Central Bank
established the categories in which banks would be able to classify Argentine
government securities listed on local or foreign capital markets. The categories
established by the Argentine Central Bank were the following: "investment
account", "available for sale" and "held for trading". The same Communique
established the accounting valuation for the securities in each of these
categories.

Government securities held by a bank and not classified in either of the two
previous categories had to be classified as held for trading. These securities
had to be marked to market, and any difference between book value and their
market price and the end of each month had to be accounted for in a bank's
income statement.

Effective January 7, 2003, Argentine Central Bank Communique "A" 3857 restricted
the possibility of classifying securities as holdings in investment accounts, to
those existing in the Bank's portfolio as of December 31, 2002.

Effective March 1, 1999, and through its Communiques "A" 2793, "A" 2859, and "A"
2898, the Argentine Central Bank:

-        eliminated the available-for-sale category. As a consequence, beginning
         March 1, 1999, banks could only classify their securities either as
         investment account or held-for-trading securities.

-        established that, with the elimination of the available-for-sale
         category, the balance of a bank's shareholders' equity account
         "Unrealized Valuation Difference" as of February 28, 1999, had to be
         reclassified under the shareholders' equity account "Retained
         Earnings".

-        eliminated the limits to the time an investment portfolio had to be
         kept and the requirement of matching funding characteristics.

These rules did not modify the accounting for either investment account or
held-for-trading securities.

Through Communiques "A" 3021 and "A" 3039, the Argentine Central Bank
established that, effective March 1, 2000, investment account securities had to
be valued at their acquisition cost increased at the end of each service period
by the corresponding coupon rate. Through Communique "A" 3278, the Argentine
Central Bank established that, effective June 1, 2001, the holdings incorporated
as investment securities had to be valued at their acquisition cost increased by
accruing their internal rate of return over the period elapsed since the date of
inclusion of the securities in the investment account category.

On June 1, 2001, following the public offer made by the Republic of Argentina to
holders of various series of its outstanding bonds to exchange them for new
issues, the Bank exchanged eligible Argentine government securities and debt
instruments ("Pagare a Tasa Variable", booked under loans) for new issues of
identical or ones with higher book value.

The Bank has participated in the debt exchange transaction carried out by the
National Government in line with Decree No.648/01 published on May 17, 2001 with
respect to the government securities held in investment accounts, and received
Argentine Global External Bonds with a face value of Ps.915,912 maturing in 2008
in exchange. The Company accounted for the new bonds at the carry-over basis of
the bonds exchanged.

                                      F-33

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

These holdings include National Government Bonds accruing interest at Libor and
maturing in 2012, received within the framework of Sections 28 and 29 of Decree
905/02 (see Note 1) recorded at their technical value. The treatment of the
difference exceeding 20% between the market value and the carrying value
mentioned above does not apply to these securities.

SECURED LOANS

Within the framework of Decree No.1387/01, the Bank has participated, on
November 6, 2001, in the exchange of Argentine public-sector debt securities and
loans, under the Promissory Note/Bond program, for new loans called Secured
Loans. The main differences between the instruments received and those exchanged
consisted of an extension of the amortization term which was 3 years for
securities originally maturing up to December 31, 2010 and a reduction of the
interest rate, which was set at 70% of the contractual rate, with a maximum rate
of 7% per annum for fixed-rate transactions and a Libor rate plus 3% for
floating rate loans. As established by article 20 of the above mentioned decree,
the conversion was made at the nominal value, at a rate of exchange of
Ps.1=U.S.$1 and in the same currency as that of the converted obligation.

The Argentine Central Bank provided that the gain arising from the difference
between the carrying value of the Secured Loans and the book value of the
securities exchanged must be recorded in an asset adjustment account and
credited to income on a monthly basis, in proportion to the term of each of the
Secured Loans received.

As a result of the exchange transaction described above, as of December 31,
2002, Banco Galicia recorded Ps.4,811,474 in Secured Loans - Principal, which
includes a gain of (Ps.91,543) resulting from the difference between the
carrying value of the Secured Loans and the book value of the securities
exchanged. This gain was recorded in an asset adjustment account.

In accordance with Decree 644 dated April 18, 2002, the principal changes are as
follows:

-        The conversion into pesos of the Secured Loans originally denominated
         in US dollars at the exchange rate of $1.40 per US dollar, as
         established by Section 1 of Decree No. 471/02.

-        The new interest rates to be accrued by those Secured Loans, as
         established by Section 3 of Decree 471/02.(see Note 1).

2.4      INTEREST INCOME (EXPENSE) RECOGNITION

Generally, interest income is recognized on an accrual basis using the linear
(effective interest) method. For loans and deposits denominated in Pesos, with
maturities greater than 92 days, interest is recognized on a compounded basis,
which provides for an increasing effective rate over the life of the loan or
deposit.

As of January 1, 1997, the Bank began offering time deposits to its customers
where the interest paid is a product of two components:

-        A fixed return where the interest expense is recognized under the
         effective interest method.

                                      F-34

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

-        A variable return, which is indexed, linked. For this component the
         interest expense is recognized in accordance with the variation in the
         underlying index.

The Bank suspends the accrual of interest generally when the related loan is
past due and the collection of interest and principal is in doubt. The
suspension of interest corresponds to the loans classified as "with problems"
and "deficient performances", or below under the Argentine Central Bank's
classification rules. Accrued interest remains on the Bank's books and is
considered to be part of the loan balance when determining the allowance for
loan losses. Interest is recognized on a cash basis after reducing the balance
of accrued interest, if applicable.

As indicated in Note 1, for the lending and borrowing transactions originally
carried out in foreign currency and converted into pesos, the adjustement from
the application of the CER was accrued at year end, where applicable.

2.5 FOREIGN EXCHANGE AND SECURITIES ACTIVITIES

The Bank enters into forward contracts to buy or sell currencies or securities
at future dates. A receivable and a payable are reflected at the time of the
agreement, which reflect the amounts of cash and currencies or securities to be
exchanged at the closing date. The difference between the value of the
receivable and payable at the original transaction date (premium) is deferred
and amortized over the contract life.

The Bank enters into purchases and sales of government securities under
agreements to resell or repurchase.

For investments sold under agreements to repurchase, the Bank records the sale
of the securities and the amounts of cash and securities to be paid and
received, respectively, at the initial transaction date. The premiums paid are
deferred and amortized over the contract life.

For investments purchased under agreements to resell, the Bank records the
purchase of the securities and the amounts of securities and cash to be paid and
received, respectively, at the initial transaction date. The premiums received
are deferred and amortized over the contract life.

The Bank purchases and sells foreign currencies on behalf of its customers,
which will settle the next day. An asset or liability is reflected for the
amounts due from or to the customer and a corresponding asset or liability is
reflected for the currency to be exchanged.

2.6 ALLOWANCE FOR LOAN LOSSES

The Bank provides for estimated future possible losses on loans and the related
accrued interest generally through the establishment of an allowance for loan
losses. The allowance charged to expenses is determined by management based upon
loan classifications, actual loss experience, current and expected economic
conditions, delinquency aging, and an evaluation of potential losses in the
current loan portfolio with specific attention to loans where any evidence that
may negatively affect the Bank's ability to recover the loan and accrued
interest is known.

                                      F-35

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

2.7 INVESTMENTS IN OTHER COMPANIES

Investments in Other Companies include equity investments in companies where a
minority interest is held, including investments in infrastructure companies and
utilities.

Under Argentine Banking GAAP, the equity method is used to account for
investments where a significant influence in the corporate decision making
process exists. Significant influence is considered to be present in one of the
following situations:

-        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.

Permanent equity investments in companies where corporate decision are not
influenced, in terms of the criteria listed above, are accounted for at the
lower of cost or share of net book value of the investee.

2.8 FIXED ASSETS AND MISCELLANEOUS ASSETS

Fixed assets and miscellaneous assets are stated at cost. Depreciation of those
properties, which were subject to the technical revaluation, is reflected in the
statements of income.

The depreciation of fixed assets and miscellaneous assets is calculated, where
appropriate, based on the revalued amounts of such assets using the
straight-line method at rates based on the estimated useful lives of the related
assets. The estimated useful lives are 50 years for properties, 10 years for
furniture and fixtures and 5 years for others. Leasehold improvements are
amortized using the straight-line method over the shorter of the lease term or
the estimated useful life of the asset.

The cost of maintenance and repairs is charged to income. The cost of
significant renewals and improvements is added to the carrying amount of the
respective fixed assets. The carrying amounts and accumulated depreciation
allowances for assets sold or retired are eliminated from the respective
accounts and gains or losses realized on disposition are reflected in the
statements of income.

2.9 INTANGIBLE ASSETS

Intangible assets are stated at cost and are amortized on a straight-line basis
over 120 months for goodwill and over a maximum of 60 months for organization
and development costs. Organization and

                                      F-36

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

development costs, in accordance with Argentine Central Bank rules, include
compensation and severance payments to personnel affected by a restructuring.

Under Argentine Banking GAAP, goodwill is no longer recognized as an asset when
it is estimated that amounts of future income will not be sufficient to absorb
the amortization of goodwill or when there are other reasons to presume that the
amount of an investment that has been made will not be recovered in full.

2.10 SHAREHOLDERS' EQUITY

Shareholders' Equity accounts have been restated following the procedure
mentioned in point 2.1, except for the "Capital Stock" and "Paid in Capital"
accounts, which have been stated at their original values. The adjustment
stemming from the restatement of these accounts was allocated to the
"Adjustments to Shareholders' Equity" account.

Income and expense accounts have been restated.

Monetary results of exposure to inflation were determined as follows:

a.       "Monetary result of financial brokerage" includes the result of
         exposure to inflation generated by assets and liabilities related to
         the usual period of brokerage activity between the supply and demand of
         financial resources.

b.       "Monetary result of operating expenses" includes the result of exposure
         to inflation generated by monetary assets and liabilities in pesos,
         related to administrative expenses, pursuant to Argentine Central Bank
         Communique "A" 3702.

c.       "Monetary result of other operations" includes the result of exposure
         to inflation generated by assets and liabilities not related to the
         financial brokerage activity.

Banco de Galicia y Buenos Aires S.A.'s income statement and statement of changes
in shareholders' equity have been disclosed as in accordance with Communique "A"
3800 of the Argentine Central Bank. At the referendum of the shareholder's
meeting, the Bank absorbed the loss for the year in advance, up to the limit of
the balances recorded in retained earnings and unrealized valuation difference
arising from the net foreign currency position.

2.11 PRESUMPTIVE MINIMUM INCOME TAX AND INCOME TAX

Effective 1998 and for the period of ten years a presumptive minimum income tax
(PMIT) was established as a complementary component of the income tax
obligation. PMIT consists in a minimum taxation, which assesses at the tax rate
of 1% of certain productive assets. Ultimately tax obligation will be the
highest of PMIT and income tax. For financial entities, the taxable basis will
be 20% of their computable assets. If in a fiscal year, PMIT obligation exceeds
income tax liability, the surplus will be available as a credit against future
income tax.

During the year, Banco Galicia determined tax loss carryforwards. Therefore, the
Bank was required to pay PMIT.

                                      F-37

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

During the year, Grupo Galicia and its non-bank subsidiaries adopted the
liability method for accounting for deferred taxes.

2.12 STATEMENT OF CASH FLOWS

The consolidated statements of cash flows were prepared using the measurement
methods prescribed by the Argentine Central Bank, but in accordance with the
presentation requirements of Statement of Financial Accounting Standards No. 95:
Statement of Cash Flows ("SFAS No. 95"). SFAS 95 establishes specific
presentation requirements and additional disclosures but does not provide
guidance with respect with the inflation adjusted financial statements. The
effect of inflation restatements and foreign exchange gains and losses on cash
flow related to financing and operating activities has been included in the line
item "Monetary loss", and the effect of inflation on cash balances has been
included in a separate line item after cash flows from investing activities.

2.13 RECLASSIFICATIONS

Certain balances from prior years have been reclassified to conform to the
current year presentation.

3.       RESTRICTED ASSETS

In accordance with Argentine Central Bank regulations, the Bank is required to
maintain average monthly assets (for example, remunerated cash-balances in
accounts with foreign correspondents, government securities purchased under
agreements to resell with the Argentine Central Bank and Argentine Central Bank
Liquidity Bills).

Since February 1, 2002, the assets computable for compliance with minimun cash
requirements are cash and Argentine Central Bank accounts.

The required daily averages calculated on a monthly basis for the month ending
on each balance sheet date were as follows:

<TABLE>
<CAPTION>
                                                            BANCO GALICIA
                                                  ---------------------------------
                                                             DECEMBER 31,
                                                  ---------------------------------
                                                      2002                2001 (1)
                                                  -------------         -----------
<S>                                               <C>                   <C>
Peso balances.............................        Ps.   134,719         Ps.       -
Foreign currency balances.................               42,189                   -
</TABLE>

(1) The Argentine Central Bank determined that the minimum liquidity and reserve
requirement balances would be computed on a quarterly basis beginning in January
2002. Under these new regulations there is no minimum liquidity requirement at
December 31, 2001.

                                      F-38

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Certain of the Bank's other assets are pledged or restricted from use under
various agreements. The following assets were restricted at each balance sheet
date:

<TABLE>
<CAPTION>
                                                                               GRUPO GALICIA
                                                                     -------------------------------
                                                                               DECEMBER 31,
                                                                     -------------------------------
                                                                         2002              2001
                                                                     ------------      -------------
<S>                                                                  <C>               <C>
Funds and securities pledged under various arrangements.....         Ps.  194,742      Ps.   881,521
Loans pledged under borrowing arrangements related to
   Equity investments in other companies (1)................               51,106             60,194
   Deposits in the Argentine Central Bank, frozen under
   Argentine Central Bank regulations.......................                4,691              3,838
   New York Branch (funds, government securities and
   certificates of deposit) ................................                    -             63,471
   Loans granted as collateral..............................            5,705,961         10,529,759
  Certificates of deposits .................................                  435                  -
                                                                     ------------      -------------
Total.......................................................         Ps.5,956,935      Ps.11,538,783
</TABLE>

(1) The Bank has granted a senior pledge on all its shares in Correo Argentino
S.A., in favor of the International Finance Corporation, the Inter American
Development Bank (the "IDB") and a syndicate of local institutions, as
collateral for financing granted to that company. The Argentine Central Bank
through Resolution No.408 dated September 9, 1999 authorized this transaction.
According to the contract signed, in the event of a deficit in funds, the Bank
and the majority shareholder of Correo Argentino S.A. should hold the financial
creditors harmless from any non-compliance as a result of such deficit. Under
the terms of the contract, Correo Argentino S.A. should inform the Bank and
Socma Americana S.A. of the existence of any deficit.

As a shareholder of the concessionaires of the water supply services, Aguas
Argentinas S.A., Aguas Provinciales de Santa Fe S.A. and Aguas Cordobesas S.A.,
Banco Galicia and the other shareholders have committed to provide financial
support to those companies if they were unable to fulfill the commitments they
have undertaken with international financial bodies.

The IDB requested that the shareholders of Aguas Argentinas S.A. and Aguas
Provinciales de Santa Fe S.A. grant loans to those companies. After the close of
these financial statements, assistance was granted to Aguas Argentinas S.A. in
the amount of US$ 598.

4.       INTEREST-BEARING DEPOSITS WITH OTHER BANKS

At December 31, 2002 and 2001, the overnight foreign bank interest-bearing
deposits included in loans amounted to Ps.156,905 and Ps.373,357, respectively.

5.       GOVERNMENT AND CORPORATE SECURITIES

The government and corporate securities classification set forth below was
determined in accordance with Argentine Banking GAAP. There are no limits to the
time an investment must be held and the matched funding requirement was
eliminated.

The available-for-sale category was eliminated by the Argentine Central Bank
effective March 1, 1999.

                                      F-39

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Securities classified as investment securities under Argentine Banking GAAP were
classified as available-for-sale securities under U.S. GAAP. See Note 39 to the
Consolidated Financial Statements.

Government and corporate securities held by the Bank consist of the following at
the respective balance sheet dates:

<TABLE>
<CAPTION>
                                                                             GRUPO GALICIA
                                                                    -------------------------------
                                                                              DECEMBER 31,
                                                                    -------------------------------
                                                                         2002              2001
                                                                    ---------------    ------------
<S>                                                                 <C>                <C>
Government Securities
Quoted:
Carried at market value
Held for trading purposes:
   Government Bonds.....................................            Ps.      3,219     Ps.      312
   Argentine Treasury Bonds.............................                     2,111           10,940
   U.S. Government Bonds................................                         -          107,089
   Others...............................................                     2,284            9,531
                                                                    --------------     ------------
Total trading securities................................            Ps.      7,614     Ps.  127,872
                                                                    --------------     ------------
Carried at amortized cost
Held for investment purposes
   Government Bonds.....................................                   687,478                -
   Argentine Republic External Bills (*)................                   970,985                -
                                                                    --------------     ------------
Total investment securities.............................            Ps.  1,658,463     Ps.        -
                                                                    --------------     ------------
Unquoted

   Fiscal Credit Certificate (*)                                           105,417          115,788
   Government Bonds.....................................                     6,204                -
   Others...............................................                    33,789           27,495
   Less: Provision for devaluation......................                      (391)            (253)
                                                                    --------------     ------------
Total Unquoted securities...............................                   145.019           143.030
                                                                    ==============     ============
Total government securities.............................            Ps.  1,811,096     Ps.  270,902
                                                                    ==============     ============
Corporate Securities
     Corporate shares ..................................                       254               20
     Negotiable obligations (quoted)....................                     9,100           11,763
     Others.............................................                         -            1,092
     Less: Reserve for market valuation.................                    (6,424)               -
                                                                    ==============     ============
Total corporate securities..............................            Ps.      2.930     Ps.   12.875
                                                                    ==============     ============
Total government and corporate securities...............            Ps.  1,814,026     Ps.  283,777
                                                                    ==============     ============
</TABLE>

(*) Government securities collateralized by future tax payments.

6.       LOANS

The lending activities of the Bank consist of the following:

Loans to the non-financial public sector: represent loans to the federal and
provincial governments of Argentina.

Loans to the financial sector: represent loans to banks and financial entities.

Loans to the non-financial private sector and residents abroad: include the
following types of lending:

                                      F-40

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

         Overdrafts - short-term obligations drawn on by customers through
         overdrafts. Also, prefinancing of exporters and other customers in
         connection with documents evidencing the future receipt of cash.

         Notes - endorsed promissory notes, discounted and purchased bills and
         factored loans.

         Mortgage loans - loans to purchase or improve real estate and
         collateralized by such real estate or commercial loans secured by real
         estate.

         Pledge loans - loans where collateral is pledged as an integral part of
         the loan document.

         Credit card loans - loans to credit cards holders.

         Consumer loans - loans to individuals.

         Others - includes mainly placements in foreign banks - short-term
         deposits in foreign banks.

Under Argentine Banking GAAP, the Bank must disclose the composition of the loan
portfolio by non-financial public sector, financial sector and non-financial
private sector and residents abroad. Additionally, the type of guarantee on
non-financial private sector loans, which corresponds to the type of collateral,
pledged on the loans (preferred guarantees related to a recorded right of first
lien), is also required to be disclosed. The classification of the loan
portfolio in this regard is as follows:

<TABLE>
<CAPTION>
                                                                        GRUPO GALICIA
                                                             -----------------------------------
                                                                         DECEMBER 31,
                                                             -----------------------------------
                                                                  2002                 2001
                                                             ---------------     ---------------
<S>                                                          <C>                 <C>
Non-financial public sector............................      Ps.   7,623,560     Ps.   8,681,840
Financial sector (Argentine) ..........................              133,644             189,186
Non-financial private sector and residents abroad
With preferred guarantees..............................            1,501,312           4,539,800
With other guarantees..................................              518,506           1,675,280
Unsecured..............................................            2,480,120           5,888,509
                                                             ---------------     ---------------
                                                                  12,257,142          20,974,615
                                                             ---------------     ---------------
Allowance for loan losses (see Note 7) ................           (1,667,300)         (1,041,206)
                                                             ---------------     ---------------
Total...................................................     Ps.  10,589,842     Ps.  19,933,409
                                                             ===============     ===============
</TABLE>

The Bank also records its loan portfolio by industry segment. The following
industry segments comprised the most significant loan concentrations at December
31, 2002 and 2001, respectively:

<TABLE>
<CAPTION>
                                                                        GRUPO GALICIA
                                                             -----------------------------------
                                                                         DECEMBER 31,
                                                             -----------------------------------
                                                                  2002                2001
                                                             ---------------     ---------------
<S>                                                          <C>                 <C>
Financial services industry............................            1.09%               3.11%
Public sector..........................................           62.20%              41.39%
Agriculture and livestock...............................           3.76%               6.48%
Consumer...............................................            8.95%              21.11%
</TABLE>

                                      F-41

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

During fiscal year 2000, the Bank granted loans to the Bank's related parties
including related officers and consolidated companies. Total loans outstanding
to these persons at June 30, 2000 amounted to Ps.142,835.

As of December 31, 2000 the loans outstanding to these persons amounted
Ps.151,867 and the charge from June 30, 2000 to December 31, 2000 reflects
payments amounting to Ps.242,932 and advances of Ps.251,964.

The total loans outstandings at December 31, 2001 amounted Ps.232,285, and the
change from December 31, 2000 to December 31, 2001 reflects payments amounting
to Ps.463,656 and advances Ps.544,074.

The total loans outstandings at December 31, 2002 amounted Ps. 123,837, and the
change from December 31, 2001 to December 31, 2002 reflects payments amounting
to Ps. 20,705 and advances 14,773. Furthermore, there were adjustments of CER
and foreign exchange difference of Ps. 23,432 on the above-mentioned portfolio.

Such loans were made in the ordinary course of business at normal credit terms,
including interest rate and collateral requirements, and, in management's
opinion, represent normal credit risk.

7.       ALLOWANCE FOR LOAN LOSSES

The activity in the allowance for loan losses for the fiscal years ended
December 31, 2002 and 2001, for the six-months ended December 31, 2000 and for
the fiscal year ended June 30, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA                        BANCO GALICIA
                                                 ---------------------------------------------------------------------
                                                                                        SIX-MONTHS
                                                                                           ENDED          YEARS ENDED
                                                      YEAR ENDED DECEMBER 31,           DECEMBER 31,        JUNE 30,
                                                 ---------------------------------     -------------------------------
                                                         2002              2001             2000             2000
                                                 --------------     --------------     -------------     -------------
<S>                                              <C>                <C>                <C>               <C>
Balance at beginning of year...................  Ps.  1,041,206     Ps.    590,875     Ps.   571,879     Ps.   586,045
Allowance charged to income....................       1,585,694            914,040           251,733           525,956
Prior allowances reversed......................               -             (2,001)           (2,905)           (3,386)
Inflation effect...............................        (656,540)                 -                 -                 -
Loans charged off..............................        (303,060)          (461,708)         (229,832)         (536,736)
                                                 --------------     --------------     -------------     -------------
Balance at end of the period/year..............  Ps.  1,667,300     Ps.  1,041,206     Ps.   590,875     Ps.   571,879
                                                 ==============     ==============     =============     =============
</TABLE>

The inflation effect represents the monetary gain from incurring Allowance for
loan losses adjusted to constant Argentine Pesos of December 31, 2002.

                                      F-42

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Certain loans, principally small loans, are charged directly to income and are
not reflected in the activity in the allowance for loan losses. The "Loan loss
provision" in the accompanying income statements includes:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA                         BANCO GALICIA
                                                 ------------------------------------------------------------------------
                                                                                        SIX-MONTHS
                                                                                           ENDED         YEARS ENDED JUNE
                                                      YEAR ENDED DECEMBER 31,           DECEMBER 31,            30,
                                                 ---------------------------------     ----------------------------------
                                                       2002              2001              2000                2000
                                                 --------------     --------------     -------------     ----------------
<S>                                              <C>                <C>                <C>               <C>
Provisions charged to income...................  Ps.  1,585,694     Ps.    914,040     Ps.   251,733     Ps.      525,956
Direct charge-off..............................          15,984             41,788            16,318               17,211
Other receivables losses.......................          29,988             43,251             1,906                1,685
Financial leases...............................           2,662                719               214                   87
                                                 --------------     --------------     -------------     ----------------
                                                 Ps.  1,634,328     Ps.    999,798     Ps.   270,171     Ps.      544,939
                                                 ==============     ==============     =============     ================
</TABLE>

The Bank has entered into certain troubled debt restructuring agreements with
customers. The Bank eliminates any differences between the principal and accrued
interest due under the original loan and the new loan amount through a charge
against the allowance for loan losses. Loans under such agreements amounted to
Ps. 47,216 at December 31, 2001.

The economic changes that took place in Argentina as from December 2001 have led
to most of the loan portfolio of Banco Galicia being subject to a restructuring
process which in many cases had not been concluded as of December 31, 2002.

8.       OTHER RECEIVABLES RESULTING FROM FINANCIAL BROKERAGE

The composition of other receivables from financial brokerage, by type of
guarantee, is as follows:

<TABLE>
<CAPTION>
                                                                 GRUPO GALICIA
                                                        --------------------------------
                                                                  DECEMBER 31,
                                                        --------------------------------
                                                             2002              2001
                                                        --------------    --------------
<S>                                                     <C>               <C>
Preferred guarantees, including deposits with
the Argentine Central Bank.........................     Ps.     58,786    Ps.    140,419
Other guarantees...................................             10,239            16,149
Unsecured (1) .....................................          9,150,637         3,659,827
Less: Allowance for doubtful accounts..............            (43,954)          (16,302)
                                                        --------------    --------------
                                                        Ps.  9,175,708    Ps.  3,800,093
                                                        ==============    ==============
</TABLE>

(1)Includes Ps.7,037,155 of "Compensation to be received from the National
Government (see note 1).

                                      F-43

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

During 2001, the Bank enters into forward transactions in foreign currencies.
The assets and corresponding liabilities related to forward transactions in
foreign currencies are as follows:

<TABLE>
<CAPTION>
                                                                            GRUPO GALICIA
                                                                   --------------------------------
                                                                             DECEMBER 31,
                                                                   --------------------------------
                                                                        2002              2001
                                                                   --------------------------------
<S>                                                                <C>               <C>
Forward foreign exchange purchases:
  Forward purchases of foreign exchange.....................       Ps.         -     Ps.        749
  Creditors for forward purchases of foreign exchange (*)...                   -                727
Forward foreign exchange sales:
  Forward sales of foreign exchange.........................                   -            370,823
  Debtors for forward sales of foreign exchange (*).........                   -            370,803
</TABLE>

(*) Forward price of currency contracts net of premiums deferred at end of
period.

At December 31, 2002 the Company did not have any outstanding forward contracts.

The breakdown of the caption "others" included in the balance sheet is as
follows:

<TABLE>
<CAPTION>
                                                                        GRUPO GALICIA
                                                               ---------------------------------
                                                                         DECEMBER 31,
                                                               ---------------------------------
                                                                    2002               2001
                                                               --------------    ---------------
<S>                                                            <C>               <C>
Mutual funds..............................................     Ps.     26,127    Ps.      21,702
Galtrust I................................................            680,230            646,698
Other financial trust participation certificates (See
note 34)..................................................            455,766            578,056
Unearned premiums for repo transactions...................                  -             19,710
Accrued commissions.......................................             14,161             34,372
Compensation to be received related to the payment of
deposits (see note 1).....................................            442,895                  -
Others....................................................            374,156            240,174
                                                               --------------    ---------------
                                                               Ps.  1,993,335    Ps.   1,540,712
                                                               ==============    ===============
</TABLE>

                                      F-44

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

9.       EQUITY INVESTMENTS IN OTHER COMPANIES

The Bank accounted his investment in Banelco S.A. and Galicia Advent Private
Equity Fund Limited for under the equity method. The rest of investments has
been account under cost adition dividends method.

Equity investments in other companies held by the Bank consist of the following
at the respective balance sheet dates:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA
                                                         -------------------------------------
                                                                     DECEMBER 31,
                                                         -------------------------------------
                                                               2002                2001
                                                         -----------------   -----------------
<S>                                                      <C>                 <C>
IN FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND
AUTHORIZED ACTIVITIES
Banelco S.A...........................................   Ps.        10,378   Ps.         8,023
Visa Argentina S.A....................................                 942                 942
Mercado de Valores de Buenos Aires S.A................               5,872               6,499
Banco Latinoamericano de Exportaciones S.A............               1,774               1,153
Galicia Advent Private Equity Fund Ltd................               7,538               6,311
Others................................................               2,809               2,501
                                                         -----------------   -----------------
TOTAL FINANCIAL INSTITUTIONS, SUPPLEMENTARY AND
AUTHORIZED ACTIVITIES.................................   Ps.        29,313   Ps.        25,429
                                                         -----------------   -----------------

IN NON-FINANCIAL INSTITUTIONS
Aguas Argentinas S.A..................................   Ps.        23,168   Ps.        45,423
Inversora Diamante S.A................................              12,832              12,832
Inversora Nihuiles S.A................................              15,614              15,614
Electrigal S.A........................................               5,407               5,407
Aguas Provinciales de Santa Fe S.A....................              10,678              17,257
A.E.C. S.A............................................               6,085               6,085
Aguas Cordobesas S.A..................................               8,834               7,099
Correo Argentino S.A..................................              27,222              27,222
Caminos de la Sierra S.A..............................               4,390               5,811
Tradecom International N.V............................              10,577              11,333
Others................................................               1,617               2,146
                                                         -----------------   -----------------
TOTAL IN NON-FINANCIAL INSTITUTIONS ..................   Ps.       126,424   Ps.       156,229
                                                         -----------------   -----------------
ALLOWANCES............................................   Ps.       (52,384)  Ps.       (33,295)
                                                         -----------------   -----------------
TOTAL EQUITY INVESTMENTS IN OTHER COMPANIES...........   Ps.       103,353   Ps.       148,363
                                                         =================   =================
</TABLE>

                                      F-45

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

10.      FIXED ASSETS AND INTANGIBLE ASSETS

The major categories of Grupo Galicia's premises and equipment and accumulated
depreciation, as of December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA
                                                         -------------------------------------
                                                                    DECEMBER 31,
                                                         -------------------------------------
                                                              2002                 2001
                                                         ------------------  -----------------
<S>                                                      <C>                 <C>
Land and buildings....................................   Ps.       550,536   Ps.       548,613
Furniture and fixtures................................             130,511             135,871
Machinery and equipment...............................             199,054             250,007
Vehicles..............................................                 724               6,254
Others................................................               7,558              12,025
Accumulated depreciation..............................            (322,838)           (333,871)
                                                         -----------------   -----------------
                                                         Ps.       565,545   Ps.       618,899
                                                         =================   =================
</TABLE>

Depreciation expenses of the years ended December 31, 2002 and 2001, the
six-month period ended December 31, 2000 and June 30, 2000, was Ps.62,809,
Ps.61,127, Ps.27,517 and Ps.54,595, respectively.

The major categories of intangible assets as of December 31, 2002 and 2001 are
as follows:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA
                                                         -------------------------------------
                                                                    DECEMBER 31,
                                                         -------------------------------------
                                                             2002                 2001
                                                         ----------------    -----------------
<S>                                                      <C>                 <C>
Goodwill, net of accumulated amortization of
Ps. 107,896 and Ps. 85,363
respectively..........................................   Ps.       168,911   Ps.       276,231
Organization and development expenses, net of
accumulated amortization of Ps. 234,180 and
Ps.188,782 respectively...............................             150,254             217,016
                                                         -----------------   -----------------
                                                         Ps.       319,165   Ps.       493,247
                                                         =================   =================
</TABLE>

Total amortization expenses of the years ended December 31, 2002 and 2001, the
six-month period ended December 31, 2000 and June 30, 2000, was Ps.167,165,
Ps.109,968, Ps.45,243 and Ps.91,558, respectively.

Organization and development expenses include software and the related
implementation services purchased from third parties, with a net book value of
Ps.126,711 and Ps.157,405 at December 31, 2002, 2001, respectively.

                                      F-46

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The table below shows the components of goodwill by type of activity for the
periods presented.

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                         -------------------------------------
                                                                    DECEMBER 31,
                                                         -------------------------------------
                                                                    2002              2001
                                                         -----------------   -----------------
<S>                                                      <C>                 <C>
Investment............................................   Ps.        16,845   Ps.        22,052
Banking...............................................              93,742             141,146
Regional Credit Card issuing companies................              58,324             113,033
                                                         -----------------   -----------------
                                                         Ps.       168,911   Ps.       276,231
                                                         =================   =================
</TABLE>

11.      MISCELLANEOUS ASSETS

Miscellaneous assets consisted of the following as of December 31, 2002 and
2001:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA
                                                         -------------------------------------
                                                                     DECEMBER 31,
                                                         -------------------------------------
                                                               2002              2001
                                                         -----------------   -----------------
<S>                                                      <C>                 <C>
Construction in progress..............................   Ps.        55,940   Ps.        34,341
Deposits on fixed asset purchases.....................               1,860               3,836
Stationery and supplies...............................               3,990               4,323
Real estates properties held for sale.................              57,166              86,188
Assets acquired through foreclosures..................                 720              13,694
Others................................................              63.489              88,902
                                                         -----------------   -----------------
                                                         Ps.      183,165    Ps.       231,284
                                                         =================   =================
</TABLE>

                                      F-47

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

12. OTHER ALLOWANCES AND RESERVES

Allowances on other assets and reserves for contingencies are as follows:

<TABLE>
<CAPTION>
                                                                              GRUPO GALICIA
                                                                    ----------------------------------
                                                                               DECEMBER 31,
                                                                    ----------------  ----------------
                                                                          2001              2000
                                                                    ----------------  ----------------
<S>                                                                 <C>               <C>
Allowances against asset accounts:
   Other receivables resulting from financial brokerage,
   for collection risk (a)........................................  Ps.       43,954  Ps.       16,302
   Assets under financial leases (a)..............................             2,439             1,116
   Equity investments in other companies (b)......................            52,384            33,295
   Miscellaneous receivables, for collection risk (a).............            29,121            55,071
Reserves for contingencies:
   For severance payments (c).....................................            10,979             3,309
   Litigations (d)................................................            24,814            53,348
   Related to commitments undertaken with public services
   companies......................................................            92,000                 -
   Claims related to controverted pesification and other
   contingencies..................................................           143,451                 -
   Sundry liabilities arising from credit card activities (e).....            16,246             7,569
   Other commitments (f)..........................................            44,178            11,436
                                                                    ----------------  ----------------
   Total reserves for contingencies...............................  Ps.      331,668  Ps.       75,662
                                                                    ================  ================
</TABLE>

(a) Based upon an assessment of debtors' performance, 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
relating to terminated 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 card receivables and for the estimated liability for the
insurance of the payment of credit card balances in the event of the death of
the credit card holder.

(f) Represents the contingent commitments related to clients in categories other
than the "normal" categories under Argentine Banking GAAP.

                                      F-48

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

13. OTHER LIABILITIES RESULTING FROM FINANCIAL BROKERAGE- ARGENTINE CENTRAL BANK

The Bank borrows funds under various credit facilities obtained from the
Argentine Central Bank for specific purposes as follows:

<TABLE>
<CAPTION>
                                                                        GRUPO GALICIA
                                                              ----------------------------------
                                                                         DECEMBER 31,
                                                              ----------------  ----------------
                                                                    2002              2001
                                                              ----------------  ----------------
<S>                                                           <C>               <C>
DESCRIPTION
Long-term liabilities:
   Advances for the acquisition of National Government
   Bonds in U.S. Dollars (*)............................      Ps.    2,424,244  Ps.            -
   Argentine Central Bank's liquidity loans.............               776,931                 -
   Other Central Bank obligations.......................                 1,818           691,323
                                                              ----------------  ----------------
Total long-term liabilities.............................      Ps.    3,202,993  Ps.      691,323
Short-term liabilities:
   Argentine Central Bank's liquidity loans.............             4,625,847         2,695,575
   Other Central Bank obligations.......................                    15               679
                                                              ----------------  ----------------
Total short-term liabilities............................      Ps.    4,625,862  Ps.    2,696,254
Accrued interest........................................               207,149            13,688
                                                              ----------------  ----------------
                                                              Ps.    8,036,004  Ps.    3,401,265
                                                              ================  ================
</TABLE>

(*) Advance for the hedge bond. Accrued interest on this advance was Ps.44,101
at December 31, 2002 (see note 1).

                                      F-49

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000

  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

14. OTHER LIABILITIES RESULTING FROM FINANCIAL BROKERAGE- BANKS AND
    INTERNATIONAL ENTITIES, AND LOANS FROM DOMESTIC FINANCIAL INSTITUTIONS.

The Bank also borrows funds under different credit arrangements from local and
foreign banks and international lending agencies as follows:

<TABLE>
<CAPTION>
                                                                          GRUPO GALICIA
                                                               ------------------------------------
                                                                           DECEMBER 31,
                                                               ------------------------------------
                                                                     2002               2001
                                                               -----------------  -----------------
<S>                                                            <C>                <C>
DESCRIPTION
  BANK AND INTERNATIONAL ENTITIES
   Long term liabilities:
          Compania Interamericana de Inversiones.............  Ps.       233,730  Ps.       151,817
          International Finance Corporation (I.F.C.).........          1,042,530            657,393
          Nederlands Financierings Maatschappij Voor
          Ontwikkeling Slande N.V  (F.M.O.)..................             64,884             42,146
          Other foreign banks................................            280,620            229,036
                                                               -----------------  -----------------
                   Total long-term liabilities (2) (3).......  Ps.     1,621,764  Ps.     1,080,392

   Short-term liabilities:
          Other lines of credit from foreign banks (1).......          1,535,421            562,445
                                                               -----------------  -----------------
TOTAL BANK AND INTERNATIONAL ENTITIES........................  Ps.     3,157,185  Ps.     1,642,837
                                                               -----------------  -----------------

  DOMESTIC AND FINANCIAL INSTITUTIONS
   Long term liabilities:
          BICE (Banco de inversiones y Comercio Exterior)....            137,145            306,771
          Other lines of domestic banks (3)..................             14,782                  -
                                                               -----------------  -----------------
                   Total long term liabilities (2)...........  Ps.       151,927  Ps.       306,771

  Short-term liabilities:
          Other lines of credit from domestic banks (1)......             47,604             42,428
                                                               -----------------  -----------------
TOTAL DOMESTIC AND FINANCIAL INSTITUTIONS....................  Ps.       199,531  Ps.       349,199
                                                               -----------------  -----------------

TOTAL........................................................  Ps.     3,356,716  Ps.     1,992,036
                                                               =================  =================
</TABLE>

(1) Short term debt in default at December 31, 2002.

Accrued interest on the above liabilities was Ps.132,244, and Ps.51,550 at
December 31, 2002 and 2001, respectively.

Loans from Banco de Inversion y Comercio Exterior for financing investment
projects, increasing the export capacity and financing the Global Multisectorial
Credit Program. These loans carry interest at floating rates that range between
4.06% and 11.13%, with maturities ranging between 1 and 10 years. Maturities of
borrowings from the Cia. Interamericana de Inversiones and from the F.M.O. are
between 1 and 10 years, with interest rates varying from between 4.38% to 9.75%.

Loans from the International Finance Corporation are at variable interest rates,
ranging from 4.75% to 6.12% with maturities between 1 and 10 years.

                                      F-50

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The liabilities with other foreign banks amounting to Ps.1,535,421 at December
31, 2002, correspond to several banks with maturities up to 10 years, and annual
interest rates between 3.00% and 7.85%.

For the above mentioned lines of credits, the Bank has formally begun
negotiations with a steering committee that was established by the Bank's
largest creditors in order to restructure the foreign debt.

Short-term credit lines with domestic banks have a weighted-average interest
rate of approximately 30.00%.

As of December 31, 2002, maturities of the above long-term loans for each of the
following five fiscal years and thereafter are as follows:

<TABLE>
<CAPTION>
                                                                                  Default             Contractual
                                                                               Acceleration            Maturity
                                                                               ------------            --------
<S>                                                                      <C>                        <C>
2002..............................................................          Ps.  (3)  1,636,546     Ps.  1,133,247
2003..............................................................                       38,255            289,866
2004..............................................................                       38,887            133,196
2005..............................................................                       25,911             70,154
2006..............................................................                       16,222             51,978
2007..............................................................                       11,656             51,393
Thereafter........................................................                        6,214             43,857
                                                                            --------------------------------------
                                                                         (2)Ps.       1,773,691     Ps.  1,773,691
                                                                            ======================================
</TABLE>

(2) Although contractual arrangements with Bank's creditors provide for the
Bank's debt to be repaid on terms that would allow the Bank to classify such
debt according to their terms for purposes of the Bank's financial information,
given that the Bank has defaulted on its debt obligations, the Bank classified
all its debt as "past due/callable" despite the fact that its creditors have not
taken requisite measures to accelerate the outstanding debt. In particular, the
Bank has an aggregate amount of US$310,000 corresponding to a loan from the
International Finance Corporation, US$19,294 corresponding to a loan from the
F.M.O. US$69,500 corresponding to a loan from Compania Interamericana de
Inversiones, and US$87,839 corresponding to other lines from several banks, that
were issued under an indenture that provides for automatic acceleration of these
lines of credit without further act of the creditors.

As of December 31, 2002 the Bank did not have any unused lines of credit.

                                      F-51

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

15. OTHER LIABILITIES RESULTING FROM FINANCIAL BROKERAGE- NEGOTIABLE OBLIGATIONS

The Board of Directors is authorized to determine all of the conditions of each
issuance of negotiable obligations, including timing, currency, price, manner
and payment terms. The amounts outstanding and the terms corresponding to
outstanding negotiable obligations are as follows:

<TABLE>
<CAPTION>
                                                                                                      GRUPO GALLCIA
                                                                                            ----------------------------------
                                                                                  ANNUAL               DECEMBER 31,
                                                                                 INTEREST   ----------------------------------
                                                                      MATURITY     RATE          2002                 2001
                                                                      --------   --------   ---------------    -----------------
<S>                                                                   <C>        <C>        <C>                <C>
LONG-TERM LIABILITIES:
M.I.G.A. S 2
  (Semi-annual interest, principal payable every six months)......      2005       4.00%    Ps.      35,754    Ps.        22,541
M.I.G.A. S 1
  (Semi-annual interest, principal payable every six months)......      2005       4.00%            149,000               94,301
Seventh series
  (Semi-annual interest, principal payable at maturity)...........      2003       9.00%            672,000              434,769
Sixth series
  (Semi-annual interest, principal payable every year beggining
 in August, 2005).................................................      2002       5.48%            504,450              327,338
F.R.N. Class 6 (*)
  (Semi-annual interest, principal payable every year beggining
in August, 2005)..................................................      2007       7.88%            244,272                    -
F.R.N. Class 7 (*)
  (Semi-annual interest, principal payable at maturity)...........      2007       5,95%            145,150                    -
Banco Galicia Uruguay S.A. (restructured deposits)
  (Annual interest 2%, principal payable: 15%                           2011       2,00%          1,555,849                    -
September '03; 15% September '04; from September '05 up to
September 2011 10% each year).....................................
                                                                                            ---------------    -----------------
Total long-term liabilities                                                                 Ps.   3,306,475    Ps.       878,949
                                                                                            ===============    =================

SHORT-TERM LIABILITIES:

Tarjetas del Mar
  (Interest fixed, principal payable at maturity).................      2002                PS.      20,849               50,142 (1)
Tarjeta Naranja
  (Interest fixed, principal payable at maturity).................      2002                         99,249(2)           270,409 (3)
Tarjetas Cuyanas
  (Interest fixed, principal payable at maturity).................      2002                          7,474(4)            36,811 (5)
Tarjeta Comfiar 9th Series
  (Interest fixed, principal payable at maturity).................      2002      16.22%                549               52,966
United States Commercial Paper 6th Series
  (Semi-annual interest, principal payable at maturity)                 2002       4.14%                  -              543,838
                                                                                            ---------------    -----------------
Total short- term liabilities                                                                       128,121              954,166
                                                                                            ---------------    -----------------
                                                                                            Ps.   3,434,596    Ps.     1,833,115
                                                                                            ===============    =================
</TABLE>

(1) Includes 9th Series and 10th Series with an annual interest rate of 16,77%
and 14,92%, respectively.

(2) Includes 6th Series, 24th Series, 25th Series and 26th Series with an annual
interest rate of 17,18%, 16,70%, 15,82% and 16,13%, respectively.

(3) Includes 27th Series with an annual interest rate of 16,46%.

(4) Includes 9th Series, 10th Series and 11th Series with an annual interest
rate of 16,10%, 16,26% and 15,51%, respectively.

(5) Includes 9th Series, 10th Series, 11th Series and 12th Series with an
average annual interest rate of 15,96%.

                                      F-52

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Interest and principal on all of the above debt securities are payable in U.S.
dollars.

Accrued interest on the above liabilities was Ps.115,918 and Ps.22,613 at
December 31, 2002 and 2001 respectively.

(*) The New York branch launched a medium-term debt securities program for up to
US$500 million, of which US$200 million were issued at December 31, 2001. Of
this amount, US$125.5 million were rescheduled at the Head Office for a term of
5 years, with a grace period of 2 years, US$68.9 million were paid in cash and a
debt reduction of US$42.6 million was granted. As of December 31, 2001 these
debt securities were included under the caption "Other liabilities resulting
from financial brokerage - Other".

Maturities of long-term negotiable obligations at December 31, 2002 are as
follows:

<TABLE>
<CAPTION>
                                         Default              Contractual
                                      acceleration              maturity
                                   ------------------     -------------------
<S>                                <C>                    <C>
Past Due / Callable.............   Ps.      1,361,204(1)  Ps.         550,785
2003............................              273,051                 991,386
2004............................              226,376                 272,711
2005............................              280,725                 326,474
2006............................              280,725                 280,725
2007............................              280,725                 280,725
2008............................              150,917                 150,917
2009............................              150,917                 150,917
2010............................              150,917                 150,917
2011............................              150,918                 150,918
                                   ------------------     -------------------
Total...........................   Ps.      3,306,475     Ps.       3,306,475
                                   ==================     ===================
</TABLE>

(1) Although contractual arrangements with the Bank's creditors provide for the
Bank's debt to be repaid on terms that would allow the Bank to classify such
debt according to their terms for purposes of its financial information, given
that the Bank has defaulted on our debt obligations, the Bank classify all its
debt as "past due/callable" despite the fact that the Bank's creditors have not
taken requisite measures to accelerate their outstanding debt. In particular,
the Bank has an aggregate amount of US$150,000 corresponding to the Negotiable
Obligation Sixth series, US$ 200,000 corresponding to the Negotiable Obligation
Seventh series , US$44,306 corresponding to the Negotiable Obligation MIGA first
series and US$10,632 corresponding to the Negotiable Obligation MIGA second
series, that were issued under an indenture that provides for automatic
acceleration of the bonds in such Series without further act of the bondholders.

                                      F-53

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

16. DIRECTORS' AND SYNDICS' FEES

The breakdown of the caption Directors' and syndics' fees in the income
statement is as follows:

<TABLE>
<CAPTION>

                                                                                                                   BANCO GALICIA
                                                                  GRUPO GALICIA                  SIX-MONTHS       ---------------
                                                        ----------------------------------          ENDED           YEARS ENDED
                                                             YEARS ENDED DECEMBER 31,           DECEMBER 31,          JUNE 30,
                                                        ----------------------------------    ----------------    ---------------
                                                             2002               2001                2000               2000
                                                        ---------------   ----------------    ----------------    ---------------
<S>                                                     <C>               <C>                 <C>                 <C>
GFG director's fees.................................    Ps.          76   Ps.          131    Ps.           68                  -
GFG syndic's fees..... .............................                 76                131                 131                  -
Banco Galicia Directors' statutory fees.............                  -             23,137              19,588    Ps.      64,322
Banco Galicia Directors' administrative fees........              1,967              5,623               2,724              5,459
Banco Galicia Syndics' fees.........................                387                483                 251                655
Subsidiary companies directors' and syndics' fees...                702              5,616               3,285              9,723
                                                        ---------------   ----------------    ----------------    ---------------
                                                        Ps.       3,208   Ps.       35,121    Ps.       26,047    Ps.      80,159
                                                        ===============   ================    ================    ===============
</TABLE>

17. CONTRIBUTIONS TO THE SOCIAL SERVICES INSTITUTE FOR BANKING EMPLOYEES

For the year ended June 30, 1998, the contributions that the Bank was required
to make to the Social Services Institute for Banking Employees (the "ISSB") were
reduced from 1% to zero by a decree of the National Executive Power. As a result
of this decree, the ISSB brought a legal action requesting the reinstatement of
the 1% contribution. During the Bank's fiscal year 2000, the 1% contribution
would have amounted approximately to Ps.31,237. For the fiscal years ended
December 31, 2002 and 2001 and for the six-month period ended December 31, 2000,
the 1% contribution would have amounted approximately to Ps.9,068, Ps.34,951 and
Ps.17,257. This amount has not been provided for in the financial statements, as
management has determined that it is not probable that the legal action will
succeed.

Currently, the Bank Employees' Health Care Scheme (the "OSBA") has brought a
legal action against all the financial institutions in the system, which has
already been answered. In addition, the Federal Public Revenue Authority (the
"AFIP") issued Order No. 6/99 ratifying that the OSBA is a legal entity other
than ISSB, therefore it does not have any legal authority to claim the
contribution. To date this situation has not been resolved.

                                      F-54

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
(Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

18. BALANCES IN FOREIGN CURRENCY

The balances of assets and liabilities denominated in foreign currencies
(principally in U.S. dollars) are as follows:

<TABLE>
<CAPTION>
                                                                       GRUPO GALICIA
                                                              -------------------------------
                                                                        DECEMBER 31,
                                                              -------------------------------
                                                                   2002             2001
                                                              --------------   --------------
<S>                                                           <C>              <C>
   Cash and due from banks................................    Ps.    282,669   Ps.    621,553
   Government and corporate securities....................         1,668,375          233,519
   Loans..................................................           964,984       17,210,852
   Other receivables resulting from financial brokerage...         7,272,114        3,228,025
   Assets under financial leases..........................                 -           96,586
   Equity investments in other companies..................            21,488           13,393
   Miscellaneous receivables..............................            23,542          683,365
   Bank premises and equipment............................            16,001           12,482
   Intangible assets......................................             1,977            6,282
   Miscellaneous assets...................................             2,374            1,610
   In process items.......................................             7,340           15,951
                                                              --------------   --------------
TOTAL ....................................................    Ps. 10,260,864   Ps. 22,123,618
                                                              ==============   ==============
LIABILITIES:
   Deposits...............................................    Ps.  2,069,926   Ps. 10,863,392
   Other liabilities resulting from financial brokerage...         7,614,591        7,291,669
   Sundry liabilities.....................................            19,887           27,170
   In process items.......................................             1,449            8,336
                                                              --------------   --------------
TOTAL.....................................................    Ps.  9,705,853   Ps. 18,190,567
                                                              ==============   ==============
</TABLE>

19. TRANSACTIONS WITH RELATED PARTIES

Grupo Galicia entered into certain transactions with controlled and
equity-method subsidiaries during the fiscal years ended December 31, 2002 and
2001, during the six-months ended December 31, 2000 and during the fiscal year
ended June 30, 2000 respectively, with the following revenues and expenses:

<TABLE>
<CAPTION>
                                                           GRUPO GALICIA                 BANCO GALICIA
                                             -----------------------------------------   -------------
                                                                           SIX-MONTHS
                                                                             ENDED
                                              YEARS ENDED DECEMBER 31,    DECEMBER 31,      JUNE 30,
                                             -----------------------------------------   -------------
                                                2002           2001           2000            2000
                                             -----------   ------------   ------------   -------------
<S>                                          <C>           <C>            <C>            <C>
Revenues recognized.......................   Ps.  50,705   Ps.  309,344   Ps.  146,007   Ps.    29,153
Expenses incurred.........................        69,508        156,370         93,325         165,870
</TABLE>

                                      F-55

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
(Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

20. BREAKDOWN OF CAPTIONS INCLUDED IN THE INCOME STATEMENT

<TABLE>
<CAPTION>
                                                                      GRUPO GALICIA                 BANCO GALICIA
                                                       ------------------------------------------   -------------
                                                                                     SIX-MONTHS
                                                                                       ENDED         YEAR ENDED
                                                         YEARS ENDED DECEMBER 31     DECEMBER 31,      JUNE 30,
                                                       ---------------------------   ------------   -------------
                                                            2002            2001          2000           2000
                                                       -------------   -----------   ------------   -------------
<S>                                                    <C>             <C>           <C>            <C>
FINANCIAL INCOME
Interest income resulting from financial brokerage:
Interest on structured notes........................   Ps.         -   Ps.  80,915   Ps.   40,571   Ps.    82,219
Interest on purchased certificates of deposits......          38,413           247            205             697
Compensatory Bond...................................         131,544             -              -               -
Additional interest on current accounts and
special accounts with the Argentine Central Bank....          20,338             -              -               -
Others..............................................          35,713        27,179          2,919           1,728
                                                       -------------   -----------   ------------   -------------
                                                       Ps.   226,008   Ps. 108,341   Ps.   43,695   Ps.    84,644
                                                       -------------   -----------   ------------   -------------

Others
Premiums on reverse repos transactions..............               -        48,429         78,104         100,167
Difference in quotation of gold and foreign
currency transactions...............................         377,191        46,312         17,493          44,311
Premiums on foreign currency transactions...........           2,399        63,176         50,329         107,637
Interest on pre-export and export financing.........          22,789             -              -               -
Others..............................................           6,878         7,811          1,956           1,615
                                                       -------------   -----------   ------------   -------------
                                                       Ps.   409,257   Ps. 165,728   Ps.  147,882   Ps.   253,730
                                                       -------------   -----------   ------------   -------------

FINANCIAL EXPENSES
Interest expense resulting from financial brokerage:
Discounts on negotiable obligations.................           4,116        44,114         34,942          72,839
Interest on negotiable obligations..................         232,153       155,716         93,251         153,722
Interest on other liabilities resulting from
financial brokerage from other banks and
international entities..............................         411,126       230,267        133,219         206,232
                                                       -------------   -----------   ------------   -------------
                                                       Ps.   647,395   Ps. 430,097   Ps.  261,412   Ps.   432,793
                                                       -------------   -----------   ------------   -------------

Other interest:
Interest on Central Bank loans                                49,247         3,141             61             175
Interests on liquidity assistance loans                    1,365,167        10,614              -               -
CER adjustment on Central Bank advances                       46,567             -              -               -
Others                                                       130,518        71,103         19,913          35,418
                                                       -------------   -----------   ------------   -------------
                                                       Ps. 1,591,499   Ps.  84,858   Ps.   19,974   Ps.    35,593
                                                       -------------   -----------   ------------   -------------

Others:
Contributions to the deposit guarantee system ......          20,222        34,145         16,348          43,625
Premiums on repo transactions.......................         140,255        78,104         61,723         109,804
Contributions and taxes on financial income.........          29,786        58,090         22,810          47,015
Charge for impairment of loans......................          28,080             -              -               -
Others..............................................           2,772         6,197          3,781           5,889
                                                       -------------   -----------   ------------   -------------
                                                       Ps.   221,115   Ps. 176,536   Ps.  104,662   Ps.   206,333
                                                       -------------   -----------   ------------   -------------

INCOME FROM SERVICES
Others
Commissions on credit cards.........................         141,029       297,649        149,561         342,639
Safety rental.......................................           5,035         7,324          3,504           7,318
Others..............................................          61,458       153,076         67,410         137,293
                                                       -------------   -----------   ------------   -------------
                                                       Ps.   207,522   Ps. 458,049   Ps.  220,475   Ps.   487,250
                                                       -------------   -----------   ------------   -------------
</TABLE>

                                      F-56

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
(Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA                BANCO GALICIA
                                                    -----------------------------------------   -------------
                                                                                  SIX-MONTHS
                                                                                    ENDED        YEAR ENDED
                                                     YEARS ENDED DECEMBER 31,    DECEMBER 31,      JUNE 30,
                                                    --------------------------   ------------   -------------
                                                        2002           2001          2000           2000
                                                    ------------   -----------   ------------   -------------
<S>                                                 <C>            <C>           <C>            <C>
EXPENSES FOR SERVICES
Others
Gross revenue taxes..............................   Ps.   17,640   Ps.  41,591   Ps.   20,306   Ps.    40,919
Linked with credit cards.........................         13,908        31,825         13,397          29,667
Others...........................................          8,387        35,034         13,828          18,207
                                                    ------------   -----------   ------------   -------------
                                                    Ps.   39,935   Ps. 108,450   Ps.   47,531   Ps.    88,793
                                                    ============   ===========   ============   =============

ADMINISTRATIVE EXPENSES
Other operating expenses
Rentals..........................................         36,216        61,959         28,987          55,222
Electricity and communications...................         42,140        69,482         36,106          76,695
Amortization of organization and development
expenses.........................................         84,290        80,024         33,869          73,593
Depreciation of bank premises and equipment......         62,809        61,127         27,517          54,595
Maintenance and repair expenses..................         26,650        44,848         21,239          43,518
Other operating expenses.........................         35,591        52,572         24,960          49,397
                                                    ------------   -----------   ------------   -------------
                                                    Ps.  287,696   Ps. 370,012   Ps.  172,678   Ps.   353,020
                                                    ============   ===========   ============   =============

MISCELLANEOUS INCOME
Interest on miscellaneous receivables (1) .......         23,175       295,561         25,940          49,073
Premiums and commissions on insurance business...        182,155       169,561              -               -
Reversal of income tax provision ................              -       102,945              -               -
Others...........................................         38,445        30,289         10,431          18,614
                                                    ------------   -----------   ------------   -------------
                                                    Ps.  243,775   Ps. 598,356   Ps.   36,371   Ps.    67,687
                                                    ============   ===========   ============   =============

MISCELLANEOUS LOSSES
Claims...........................................          3,728        10,448          6,009          10,411
Amortization of goodwill.........................         82,875        29,944         11,374          17,965
Commissions and expenses on insurance business ..         95,489       146,972              -               -
Others...........................................         86,469        35,639         28,890          31,013
                                                    ------------   -----------   ------------   -------------
                                                    Ps.  268,561   Ps. 223,003   Ps.   46,273   Ps.    59,389
                                                    ============   ===========   ============   =============
</TABLE>

(1)  Includes income related to securities sold under repurchase agreements.

21. INCOME TAX

The income tax amounts estimated for the fiscal years ended December 31, 2002
and 2001, for the six-months ended December 31, 2000 and for the fiscal year
ended June 30, 2000 amounted to Ps.65,847, Ps.157,677, Ps.114,405 and
Ps.162,141, respectively. The statutory income tax rate at December 31, 2002,
2001, 2000 and June 30, 2000 was 35%. At December 31, 2002 the Group had tax
loss carryforwards in the approximate amount of Ps. 3,485,806 that may reduce
future year's taxable income for income tax purposes. Such tax loss
carryforwards expires in the following ten years.

At December 31, 2002, PMIT available to credit future income tax amount to Ps.
11,702. Such PMIT expires in the following ten years.

                                      F-57

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
(Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

22.      SHAREHOLDERS' EQUITY AND RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF
         PROFITS

The distribution of retained earnings in the form of dividends is governed by
the Argentine Commercial Companies Law and Resolution N(degree) 290/97 of the
CNV. These laws oblige Grupo Galicia to transfer 5% of its net income to a legal
reserve until the reserve reaches en amount equal to 20% of the capital stock.

Under the Argentine Central Bank regulation, 20.0% of the Bank's net income must
be allocated to a legal reserve, which is reflected in the statement of changes
in shareholders' equity. Under Argentine law, cash dividends may be declared
only out of unrestricted retained earnings.

Furthermore, Argentine Central Bank Communique "A" 3785 dated October 29, 2002
restricted the distribution of cash dividends. Such rule establishes that the
Bank should adjust its earnings to be distributed as cash dividends with the
difference between the market value and the carrying value of the compensatory
and hedge bonds after netting the legal reserve and other reserves established
by the Bank's by-laws.

The "Adjustments to shareholders' equity" caption in the statement of changes in
shareholders' equity represents:

-    the balance of the 1981 technical valuation of fixed assets of the Bank and
     its equity investees, available to absorb losses on the disposal or
     devaluation of such fixed assets;

-    the inflation adjustment related to capital stock at the beginning of each
     period, adjusted to constant Pesos of August 31, 1995. Capital stock
     maintains its nominal (par) value at each balance sheet date;

-    the inflation adjustment related to the increase in capital stock from
     stock distributions (adjustments to capital). The adjustment represents the
     effect of inflation from the stock distribution date to the end of each
     period, and is restated to constant Pesos as of August, 31, 1995;

-    the inflation adjustment related to capital stock at the beginning of each
     period, adjusted to constant Pesos of December 31, 2002. Capital stock
     maintains its nominal (par) value at each balance sheet date; and

-    the inflation adjustment related to the increase in capital stock from
     stock distributions (adjustments to capital). The adjustment represents the
     effect of inflation from the stock distribution date to the end of each
     period, and is restated to constant Pesos as of December 31, 2002.

The composition of Adjustments to shareholders' equity is as follows:

<TABLE>
<CAPTION>
                           GRUPO GALICIA
                       ---------------------
                       DECEMBER    DECEMBER
                         2002        2001
                       ---------------------
<S>                    <C>         <C>
Inflation to:
- capital stock        1,293,869   1,293,869
- paid- in- capital       93,866      93,866
                       ---------   ---------
                       1,387,735   1,387,735
</TABLE>

                                      F-58

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
(Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The Bank has annually distributed shares of common stock to its then-current
shareholders in proportion to their holdings. Such distributions of stock are
characterized under Argentine law as capitalization of retained earnings and
capitalization of adjustments to capital. The shareholders must approve such
distributions of stock.

23.      MINIMUM CAPITAL REQUIREMENTS

The capital adequacy of Grupo Galicia is not under the supervision of the
Argentine Central Bank. Grupo Galicia, has a minimum capital requirement from
the Commercial Companies Law of Ps.12.

Under the Argentine Central Bank regulations, the Bank is required to maintain
minimum levels of capital, as defined ("minimum capital"). The minimum capital,
is based upon risk-weighted assets, and the balances of Bank premises and
equipment, intangible assets and unquoted equity investments. The required
minimum capital and the Bank's capital calculated under the Central Bank
requirements are as follows:

<TABLE>
<CAPTION>
                                                                      BANCO GALICIA
                                            -----------------------------------------------------------------
                                                                                    SHAREHOLDER'S EQUITY AS A
                                            MINIMUM EQUITY   SHAREHOLDER'S EQUITY      % OF MINIMUM EQUITY
                                            -----------------------------------------------------------------
<S>                                         <C>              <C>                    <C>
December 31, 2002 .......................   Ps.          -   Ps.                -                  -
December 31, 2001 .......................        1,863,649              2,652,249             142.31
December 31, 2000........................        1,965,052              2,510,015             127.73
June 30, 2000............................        1,773,922              2,574,579             145.13
</TABLE>

As of December 31, 2002, the Argentine Central Bank suspended the regulation
requiring minimum levels of capital.

24.      EARNINGS PER SHARE

Stock distributions (see note 22 and 32) were declared to shareholders in 2001.
Accordingly, all common share data include the effects of such distributions.
Earnings per share is based upon the weighted average of common shares
outstanding in the amount of 1,092,407,017 of Grupo Galicia for the years ended
December 31, 2002 and 2001 and 1,023,673,418 of Grupo Galicia for the six-months
ended December 31, 2000. All share and per share amounts corresponding to June
30, 2000, have been restated to reflect the effect of the public exchange offer
between Grupo Galicia and the Bank, accepted on July 26, 2000. This restatement
is based upon the amount of common shares of 1,171,704,540 assuming a 100% of
ownership after the exchange.

At December 31, 2002, 2001 and 2000 and June 30, 2000 there were no convertible
subordinated negotiable obligations outstanding and therefore for the purposes
of calculating earnings per share Grupo Galicia had a simple capital structure.

25.      CONTRIBUTION TO THE DEPOSIT GUARANTEE SYSTEM

Pursuant to its Communique "A" 2337, the Argentine Central Bank established
rules for applying the deposit guarantee system and the way of settling the
related contributions. Furthermore, the National Executive Power through Decree
No.1127/98 dated September 24, 1998 extended this guarantee system to cover
demand deposits and time deposits of up to Ps.30 stated either in pesos or in
foreign currency.

                                      F-59

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    For the fiscal years ended December 31, 2002 and 2001, for the six-months
       ended December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

This system does not cover the deposits made by other financial institutions
(including the time deposit certificates acquired through a secondary
transaction), the deposits made by persons related to the Bank, either directly
or indirectly, deposits of securities, acceptances or guarantees and those set
up after July 1, 1995 at an interest rate exceeding the one that the Argentine
Central Bank regularly establishes based on a daily survey conducted by it. Nor
does this system cover deposits whose ownership has been acquired through
endorsement and placement, which offer incentives in addition to the interest
rate. The System has been implemented through the creation of the Deposit
Insurance Fund, which is managed by a company called Seguros de Depositos S.A.
(SEDESA). The shareholders of SEDESA are the Argentine Central Bank and the
financial institutions in the proportion determined for each one by the
Argentine Central Bank based on the contributions made to the said fund.

Through Communique "A" 3068, the Argentine Central Bank reduced the normal
contribution to the said Fund, which amounted to 0.03%, to half, provided that
the financial institution arranges with SEDESA 36-month loans, to be earmarked
for the Deposit Insurance Fund. Interest on these loans has been determined on
the basis of the yield obtained by the aforesaid Fund on its placements.

As from September 2000, Argentine Central Bank Communique "A" 3153 eliminated
the above-mentioned loan and the normal contribution of 0.015% on items
comprised in the calculation basis remained in force.

As from December 2001, Argentine Central Bank Communique "A" 3358 resolved to
increase the contribution to 0.03%.

The Bank recognized contributions amounting to Ps.20,222, Ps.34,145, Ps.16,348
and Ps.43,625 for the fiscal years ended December 31,2002 and 2001, for the
six-months ended December 31,2000 and for the fiscal year ended June 30, 2000,
respectively, under the account captioned "Financial Expenses - Contribution to
the Deposit Guarantee System".

26.  EMPLOYEE BENEFIT PLANS

Neither the Bank nor its subsidiaries maintain pension plans for their
personnel. The Bank is obligated to pay employer contributions to the National
Pension Plan System, determined on the basis of the total monthly payroll.

These expenses aggregated Ps.16,874, Ps.37,253, Ps.15,522 and Ps.31,552 for the
fiscal years ended December 31, 2002 and 2001, for the sixth-month period ended
December 31, 2000 and for the year ended June 30, 2000, respectively.

On November 19, 2001, the beneficiaries of the Galicia 2004 Trust were
designated, as stipulated in the "Framework Trust Agreement" signed on November
4, 1999, to implement an incentive program in favor of certain executives of the
Bank. Of the total amount of Ps.4,000 transferred to the trustee by the Galicia
2004 Trust, which were used for the purchase of shares of Grupo Financiero
Galicia S.A., 855,442 shares and 189,116 ADS were acquired. The amount
transferred has been expensed as incurred.

Shares and ADS of 855,442 and 28,046.60 respectively, were awarded to certain
executives. 3,400 ADS that were not awarded were returned to the trustor. The
remaining balance of 157,669.40 ADS was used to create the Galicia 2005 Trust.

                                      F-60

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    For the fiscal years ended December 31, 2002 and 2001, for the six-months
       ended December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

27.  INCOME STATEMENTS AND BALANCE SHEETS

The presentation of financial statements according to the Argentine Central Bank
rules differs significantly from the format required by the Securities and
Exchange Commission under Rules 210.9 to 210.9-07 of Regulation S-X (Article 9).
The income statements presented below discloses the categories required by
Article 9:

<TABLE>
<CAPTION>
                                                    ------------------------------------------------------------     -------------
                                                                           GRUPO GALICIA                             BANCO GALICIA
                                                    ------------------------------------------------------------     -------------
                                                                                                    SIX-MONTHS
                                                                                                       ENDED           YEAR ENDED
                                                          YEARS ENDED DECEMBER 31,                  DECEMBER 31,        JUNE 30,
                                                    ------------------------------------------------------------      ------------
                                                         2002                   2001                    2000              2000
                                                    -------------          -------------            ------------      ------------
<S>                                                 <C>                    <C>                      <C>               <C>
INTEREST INCOME:
Interest and fees on loans (*)..................    Ps. 4,372,230          Ps. 3,185,022            Ps.1,430,795      Ps.2,626,383
Interest and dividends on investment securities:
Tax-exempt......................................             (230)               210,021                 117,150           253,203
Interest on interest bearing deposits with
other banks.....................................            2,349                 63,184                  53,695           103,317
Interest on other receivables from financial
brokerage.......................................          602,782                211,314                  70,131            85,900
Interest on securities and foreign exchange
purchased under agreements to resell............                -                 48,429                  78,104           100,167
Government securities and other trading gains,
net.............................................          296,285                 65,100                  18,812            73,923
                                                    -------------          -------------            ------------      ------------
Total interest income...........................        5,273,416              3,783,070               1,768,687         3,242,893
                                                    -------------          -------------            ------------      ------------
INTEREST EXPENSE
Interest on deposits............................        1,349,472              1,466,711                 598,741         1,055,099
Interest on securities sold under agreements
to repurchase...................................          140,255                 78,432                  61,706           109,717
Interest on short-term liabilities from
financial intermediation........................        1,449,066                177,971                  81,055           125,065
Interest on long-term liabilities from
financial intermediation........................        1,349,900                284,754                 181,781           335,075
Monetary Loss from financial intermediation.....        1,425,319                      -                       -                 -
                                                    -------------          -------------            ------------      ------------
Total interest expense..........................        5,714,012               2007,868                 923,283         1,624,956
                                                    -------------          -------------            ------------      ------------
Net interest income.............................         (440,596)             1,775,202                 845,404         1,617,937
                                                    -------------          -------------            ------------      ------------
Allowance for loan losses.......................        1,601,286                930,504                 235,452           494,765
                                                    -------------          -------------            ------------      ------------
Net interest income after provision for loan
losses..........................................       (2,041,882)               844,698                 609,952         1,123,172
                                                    -------------          -------------            ------------      ------------
</TABLE>

(*) Includes adjustments of the consumer price index.

                                      F-61

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    For the fiscal years ended December 31, 2002 and 2001, for the six-months
       ended December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

<TABLE>
<CAPTION>
                                                                           GRUPO GALICIA                             BANCO GALICIA
                                                    ------------------------------------------------------------     -------------
                                                                                                    SIX-MONTHS
                                                                                                       ENDED           YEAR ENDED
                                                          YEAR ENDED DECEMBER 31,                   DECEMBER 31,        JUNE 30,
                                                    ------------------------------------            ------------      ------------
                                                         2002                   2001                    2000              2000
                                                    -------------          -------------            ------------      ------------
<S>                                                 <C>                    <C>                      <C>               <C>
NON-INTEREST INCOME:
Service charges on deposit accounts.............    Ps.    90,468          Ps.   180,724            Ps.   88,419      Ps.  170,787
Credit card service charges and fees............          188,851                297,542                 144,770           277,454
Other commissions...............................          238,340                615,777                 251,473           434,322
Income from equity in other companies...........                -                 34,656                       -                 -
Premiums and commissions on insurance business..          182,155                169,561                       -                 -
Absoption subject to the Approval of the Annual
Shareholders Meeting (*)........................        1,358,193                      -                       -                 -
Other...........................................          359,455                267,462                 101,298           191,108
Monetary gain (loss) on other transactions......         (161,680)                     -                       -                 -
                                                    -------------          -------------            ------------      ------------

Total non-interest income.......................    Ps. 2,255,782          Ps. 1,565,722            Ps.  585,960      Ps.1,073,671
                                                    -------------          -------------            ------------      ------------
NON-INTEREST EXPENSE:
Commissions.....................................          116,746                170,651                  74,974           140,716
Salaries and social security charges............          432,553                592,194                 293,916           558,425
Fees and external administrative services.......           83,898                130,816                  71,417           170,199
Depreciation of bank premises and equipment.....           62,809                 61,127                  27,517            54,595
Personnel services..............................           22,378                 54,126                  27,921            51,834
Rentals.........................................           36,216                 61,959                  28,987            55,222
Electricity and communications..................           42,140                 69,482                  36,106            76,695
Advertising and publicity.......................           15,236                 54,060                  33,002            60,356
Taxes...........................................          125,009                218,066                  82,573           183,194
Amortization of organization and development
expenses........................................           84,290                 80,024                  33,869            73,593
Loss from equity in other companies.............           51,522                      -                   9,714            11,973
Maintenance and repair expenses.................           26,650                 44,848                  21,239            43,518
Minority interest...............................         (267,242)                21,967                  13,779              (651)
Commissions and expenses on insurance business..          102,497                146,972                       -                 -
Other...........................................          692,963                284,197                 130,092           213,556
Monetary result from operating expenses.........          (20,819)                     -                       -                 -
                                                    -------------          -------------            ------------      ------------

Total non-interest expense......................    Ps. 1,606,846          Ps. 1,990,489            Ps.  885,106      Ps.1,693,225
                                                    -------------          -------------            ------------      ------------
Income before tax expense.......................       (1,392,946)               419,931                 310,806           503,618
Income tax expense..............................          (65,847)              (157,677)               (114,405)         (162,141)
                                                    -------------          -------------            ------------      ------------
Net income .....................................    Ps.(1,458,793)         Ps.   262,254            Ps.  196,401      Ps.  341,477
                                                    =============          =============            ============      ============
</TABLE>

(*) Effect on the foreign currency position compensation.

Certain categories of income and expense maintained by the Bank have been
presented in the Article 9 income statement in a manner which warrants further
discussion as follows:

- Income from trading activities, net: until late 2001, the Bank actively traded
its government securities portfolio and does not distinguish in its accounting
records between interest and realized and unrealized gains and losses on such
securities. This caption is included as a component of interest income.

- Provision for loan losses: this balance includes direct charge offs plus the
allowance for losses on loans and other receivable charged to the allowance for
loan losses, less loan loss allowances reversed and bad debts recovered.

                                      F-62

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    For the fiscal years ended December 31, 2002 and 2001, for the six-months
       ended December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Argentine Central Bank rules also require certain classifications of assets and
liabilities which are different from those required by Article 9. The following
balance sheet presents Grupo Galicia's balance sheet at December 31, 2002 and
2001 as if they had followed Article 9 balance sheet disclosure requirements.

<TABLE>
<CAPTION>
                                                                     GRUPO GALICIA
                                                         -------------------------------------
                                                                     DECEMBER 31,
                                                         -------------------------------------
                                                              2002                   2001
                                                         --------------         --------------
<S>                                                      <C>                    <C>
ASSETS:
   Cash and due from banks..........................     Ps.    572,386         Ps.    758,435
   Interest-bearing deposits in other banks.........            156,905                746,864
   Trading account assets...........................             35,164                140,747
   Available for sale securities....................          3,267,025              2,946,132
   Loans............................................         11,686,616             21,039,217
   Allowances for loan losses.......................         (1,667,300)            (1,041,206)
   Fixed assets.....................................            565,545                618,899
   Compensatory and hedge bonds to be received......          7,037,155                      -
   Other assets.....................................          2,044,423              2,427,602
                                                         --------------         --------------
        Total assets................................     Ps. 23,697,919         Ps. 27,636,690
                                                         ==============         ==============
LIABILITIES AND SHAREHOLDERS' EQUITY:
   Deposits.........................................     Ps.  5,117,028         Ps. 13,255,378
   Short-term borrowing.............................          6,544,157              4,268,980
   Other liabilities................................          1,714,350              3,277,572
   Long-term debt...................................          8,283,159              3,425,378
   Commitments and contingent liabilities...........            331,668                 75,662
   Minority interest in Consolidated Subsidiaries...             83,082                256,973
   Common stock.....................................          1,092,407              1,092,407
   Other shareholders' equity.......................            532,068              1,984,340
                                                         --------------         --------------
        Total liabilities and shareholders' equity..     Ps. 23,697,919         Ps. 27,636,690
                                                         ==============         ==============
</TABLE>

                                      F-63

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The carrying value and market value of each classification of available-for-sale
securities in the Article 9 balance sheet, are as follows.

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA
                                  ---------------------------------------------------------------------------------------------
                                             DECEMBER 31, 2002                                 DECEMBER 31, 2001
                                  ---------------------------------------------------------------------------------------------
                                                   UNREALIZED                                      UNREALIZED
                                  CARRYING VALUE  GAINS/(LOSSES)   MARKET VALUE  CARRYING VALUE  GAINS/(LOSSES)  MARKET VALUE
                                  --------------  --------------- -------------  --------------  --------------  ------------
<S>                               <C>             <C>             <C>            <C>             <C>             <C>
National Government Bonds....      Ps.        -               -   Ps.        -    Ps. 610,058                -    Ps. 610,058
Argentine External Bills (4).           970,985               -        970,985        619,451                -        619,451
BODEN 2012 - Compensatory
Bond.........................           687,478    (2)  (20,128)       288,932              -                -              -
Fiscal Credit Certificate (4)           105,417               -        105,417        115,787                -        115,787
BODEN 2012...................             4,500          (1,119)         3,381              -                -              -
                                   ------------    ------------    -----------   ------------     ------------   ------------
      Total available for
      sale securities........         1,768,380         (21,247)     1,368,715      1,345,296                -      1,345,296
GalTrust I...................           680,230    (3)    6,827        432,625        646,698                -   (1)   90,909
GalTrust II, III, IV and V...            81,440    Ps.        -         81,440        510,158          (57,037)       453,121
Galicia Mortgage Trust.......            89,636               -         89,636              -                -              -
Secured loans trust..........            27,000               -         27,000              -                -              -
Other securities.............           620,339               -        620,339        443,980                -        443,980
                                   ------------    ------------    -----------   ------------     ------------   ------------
      TOTAL..................      Ps.3,267,025    Ps.  (14,420)  Ps.2,619,755   Ps.2,946,132     Ps.  (57,037)  Ps.2,333,306
                                   ============    ============   ============   ============     ============   ============
</TABLE>

(1) For U.S. GAAP purposes,  the unrealized loss of Ps.555,789 is considered to
    be other than temporary (see note 39 j.)

(2) For U.S. GAAP purposes, the carrying value of the Compensatory Bond received
    amounts to Ps.309,060 (see note 39 e (ii)).

(3) For U.S.  GAAP purposes,  the carrying value of the Galtrust I amounts to
    Ps.425,798 ( see note 39 j).

(4) These instruments can be used to repay taxes, including value-added tax

The maturities at December 31, 2002  of the government securities
available-for-sale and the GalTrust I, II, and V securities included in the
Article 9 balance sheet are as follows:

<TABLE>
<CAPTION>
                                                                       GRUPO GALICIA
                                   --------------------------------------------------------------------------------------
                                                                     DECEMBER 31, 2002
                                   --------------------------------------------------------------------------------------
                                                                    MATURING AFTER 1      MATURING AFTER
                                                   MATURING WITHIN  YEAR BUT WITHIN 5  5 YEARS BUT WITHIN  MATURING AFTER
                                   CARRYING VALUE       1 YEAR             YEARS             10 YEARS         10 YEARS
                                   --------------  ---------------  -----------------  ------------------  --------------
<S>                                <C>             <C>              <C>                <C>                 <C>
Argentine External Bills......     Ps.   970,985         582,592      Ps.   388,393                   -               -
BODEN 2012 - Compensatory
Bond..........................           687,478               -            257,804     Ps.     429,674               -
BODEN 2012....................             4,500
Fiscal Credit Certificate.....           105,417          52,708             52,709                   -               -
                                   -------------   -------------      -------------     ---------------     -----------
  Total available for sale
  securities..................     Ps. 1,768,380   Ps.   635,300      Ps.   698,906     Ps.     429,674               -
                                   -------------   =============      =============     ===============     ===========
GalTrust I....................           680,230               -      Ps.    92,511     Ps.     209,511     Ps. 378,208
GalTrust II and V.............            81,440   Ps.    11,499             52,358              14,159           3,424
Galicia Mortgage Trust........            89,636                                                 74,871          14,765
Secured loans trust..............         27,000                                                 27,000
Other securities..................       620,339
                                   -------------
  TOTAL........................... Ps  3,267,025
                                   =============
</TABLE>

                                      F-64

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

28. OPERATIONS BY GEOGRAPHICAL SEGMENT

The main financial information, classified by country where transactions
originate, is shown below. Most of the transactions originated in the Republic
of Uruguay were with Argentine citizens and enterprises, and were denominated in
U.S. dollars. Transactions between different geographical segments have been
eliminated for the purposes of this note.

<TABLE>
<CAPTION>
                                                      GRUPO GALICIA                                      BANCO GALICIA
                                           -------------------------------------------------------   --------------------
                                                                                    SIX-MONTHS
                                                                                       ENDED
                                                YEARS ENDED DECEMBER 31,            DECEMBER 31,      YEAR ENDED JUNE 30,
                                           ------------------------------------  -----------------   -------------------
                                                2002                2001               2000                 2000
                                           -----------------  -----------------  -----------------   -------------------
<S>                                        <C>                <C>                <C>                 <C>
Total revenues:(*)
   Republic of Argentina................   Ps.    6,029,518   Ps.    5,075,535   Ps.    2,244,551     Ps.      4,101,459
   Republic of Uruguay..................            352,256            211,734             80,118                154,849
   U.S.A................................            172,383            137,439             69,449                110,700
   Grand Cayman Island..................            (6,140)                848                  2                      2
   United Kingdom.......................                  -                181                 50                     87
Net income (loss), net of monetary
effects allocable to each country:
   Republic of Argentina................         (1,463,089)           290,295            232,785                370,367
   Republic of Uruguay..................            (74,931)           (35,477)           (23,395)               (31,657)
   U.S.A................................            127,787             56,439             20,789                 40,095
   Grand Cayman Island..................            (48,560)           (47,199)           (32,782)               (35,128)
   United Kingdom.......................                  -             (1,804)              (996)                (2,200)
Total assets:
   Republic of Argentina................         22,208,622         23,685,036         33,739,807             32,584,419
   Republic of Uruguay..................          1,291,299          2,850,400          1,521,800              1,352,691
   U.S.A................................             15,588          1,096,970          1,305,449              1,189,847
   Grand Cayman Island..................            182,410                743                146                     87
   United Kingdom.......................                  -              3,541              2,475                  2,237
Fixed assets
   Republic of Argentina................            549,544            606,340            562,925                555,105
   Republic of Uruguay..................             16,001             11,855             12,606                 12,185
   U.S.A................................                  -                614                673                    570
   United Kingdom.......................                  -                 90                166                    229
Miscellaneous assets
   Republic of Argentina................            180,791            229,674            178,233                161,354
   Republic of Uruguay..................              2,374              1,610                 94                     98
Goodwill
   Republic of Argentina................            167,260            271,530            178,692                145,402
   Republic of Uruguay..................              1,651              4,701              5,326                  5,642
Other intangible assets
   Republic of Argentina................            149,928            215,433            184,380                171,927
   Republic of Uruguay..................                326                452                734                    111
   U.S.A................................                  -              1,127                979                    450
   Grand Cayman Island..................                  -                  4                 13                     17
Geographical segment assets as a
percentage of total assets
   Republic of Argentina................              93.71%             85.70%             92.26%                 92.75%
   Republic of Uruguay..................               5,45              10.31               4.16                   3.85
   U.S.A................................               0.07               3.97               3.57                   3.39
   Grand Cayman Island/United Kingdom...               0.77               0.02               0.01                   0.01
</TABLE>

(*) The caption Revenues includes financial income, income from services and
miscellaneous income.

                                      F-65

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

29. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of its business, the Bank was a party to financial
instruments with off-balance sheet risk, in order to meet the financing needs of
its customers. These instruments expose the Bank to credit risk, in addition to
amounts recognized in the consolidated balance sheets. These financial
instruments include commitments to extend credit, standby letters of credit,
guarantees granted and acceptances. Guarantees granted are surety guarantees in
connection with transactions between two parties.

The Bank uses the same credit policies in making commitments, conditional
obligations and guarantees as it does for granting loans. In the opinion of
Management, the Bank's outstanding commitments and guarantees do not represent
unusual credit risk.

The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument, for commitments to extend credit, standby
letters of credit, guarantees granted and acceptances is represented by the
contractual notional amount of those investments.

A summary of the credit exposure related to these items is shown below:

<TABLE>
<CAPTION>
                                                                        GRUPO GALICIA
                                                            --------------------------------------
                                                                        DECEMBER 31,
                                                            --------------------------------------
                                                                   2002                2001
                                                            ---------------------------------------
<S>                                                         <C>                  <C>
Commitments to extend credit......................          Ps.        169,563   Ps.      554,314
Standby letters of credit.........................                      48,587             54,285
Guarantees granted................................                     268,598            744,509
Acceptances.......................................                     104,846            153,331
</TABLE>

Commitments to extend credit are agreements to lend to a customer at a future
date, subject to the meeting of the contractual terms. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since many of the commitments are expected to expire without being
drawn upon, total commitment amounts do not necessarily represent actual future
cash requirements of the Bank. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. In addition to the above commitment,
at December 31, 2002 and 2001 the available purchase limits for credit card
holders amounted to Ps.1,093,774 and Ps.5,406,927, respectively.

Standby letters of credit and guarantees granted are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.

Acceptances are conditional commitments for foreign trade transactions.

The credit risk involved in issuing letters of credit and granting guarantees is
essentially the same as that involved in extending loan facilities to customers.
In order to grant guarantees to its customers, the Bank may require counter
guarantees. These financial customer guarantees are classified, by type, as
follows:

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                           -------------------------------
                                                                    DECEMBER 31,
                                                           -------------------------------
                                                                2002            2001
                                                           -------------------------------
<S>                                                        <C>              <C>
Preferred counter guarantees.......................        Ps.     151,329  Ps.   268,664
Other counter guarantees...........................                 43,690         63,949
</TABLE>

                                      F-66

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The Bank accounts for checks drawn on it and other banks, as well as other items
in process of collection, such as notes, bills and miscellaneous items, in
memorandum accounts until such time as the related item clears or is accepted.
In management's opinion, the risk of loss on these clearing transactions is not
significant. The amounts of clearing items in process were as follows:

<TABLE>
<CAPTION>
                                                                    GRUPO GALICIA
                                                           --------------------------------
                                                                    DECEMBER 31,
                                                           --------------------------------
                                                                2002             2001
                                                           ---------------  ---------------
<S>                                                        <C>              <C>
Checks drawn on the Bank.........................          Ps.      77,785  Ps.    844,735
Checks drawn on the other Bank...................                  127,239       1,048,284
Bills and other items for collection.............                  271,595         654,446
</TABLE>

As regards the fiduciary risk, during the fiscal year 2000, the Bank was
appointed as trustee under four trust agreements to guarantee compliance with
the obligations arising from different contracts between the parties.

At December 31, 2002 and 2001 the trust funds amounted to Ps.76,508 and
Ps.55,194, respectively.

In addition, the Bank has securities in custody, mainly related to its activity
as mutual fund depositary institution. At December 31, 2002 and 2001, these
securities amounted to Ps.6,422,056 and Ps.4,267,298, respectively.

30. DERIVATIVE FINANCIAL INSTRUMENTS

The Bank uses a variety of derivative financial instruments, including forward
contracts, options and interest rate futures as part of its overall risk
management strategy and for trading purposes. To the extent that these
instruments create any interest rate, foreign currency or other financial
mismatch between the Bank's assets and liabilities, the derivative financial
instruments increases the market risk to which the Bank is exposed.

In addition the Bank is exposed to credit risk on these instruments. The Bank
would have credit losses in the event of non-performance by the counter-parties
that issued the financial instruments. The credit exposure of derivative
contracts is represented by the sum of the positive fair value of the individual
contracts at the reporting date.

In order to reduce its counter-party credit risk the Bank performs a credit
analysis of each counter-party and does not exceed the exposure limits
established by the Board of Directors.

As of December 31, 2002 no derivate transaccions except for option contract were
outstanding.

The following was the notional and fair values of the Bank's derivative
activities at December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA
                     --------------------------------------------------------------------------------------------------------
                             NOTIONAL                        BOOK                              FAIR VALUES
                                                                           --------------------------------------------------
                              AMOUNTS                        VALUE                  ASSET                    LIABILITY
                     --------------------------     --------------------   -----------------------     ----------------------
                         2002           2001         2002       2001         2002         2001           2002        2001
                     ------------    ----------     ------     --------    ---------    ----------     --------    ----------
<S>                  <C>             <C>            <C>        <C>         <C>          <C>            <C>         <C>
Forward currency
exchange contracts:
Purchases.......     Ps.       -     Ps.    749     Ps.  -     Ps.    2    Ps.     -             -     Ps.    -    Ps.     2
Sales...........               -        370,823          -       13,993            -    Ps  14,931            -            -
                                                                           ---------    ----------     --------    ---------
                                                                           Ps.     -    Ps. 14,931     Ps.    -    Ps.     2
                                                                           =========    ==========     ========    =========
</TABLE>

                                      F-67

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

At December 31, 2002 and 2001 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.

<TABLE>
<CAPTION>
                                                           GRUPO GALICIA
                            --------------------------------------------------------------------------
                                     MEMORANDUM ACCOUNTS                         FAIR VALUE
                            ------------------------------------     ---------------------------------
                                        DECEMBER 31,                            DECEMBER 31,
                            ------------------------------------     ---------------------------------
                                   2002              2001                2002               2001
                            -----------------   ----------------     ---------------  ----------------
<S>                         <C>                 <C>                  <C>              <C>
Option contracts:
Written call options        Ps.     11,863           7,704           Ps.    11,863    Ps.     7,704
Purchased call options               2,499           1,623                   2,499            1,623
</TABLE>

31. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards No. 107 ("SFAS") "Disclosures about Fair Value of
Financial Instruments" requires disclosures of estimates of fair value of
financial instruments. These estimates were made at the end of December 2002 and
2001. Because many of the Bank's financial instruments do not have a ready
trading market from which to determine fair value, the disclosures are based
upon significant estimates regarding economic and current market conditions and
risk characteristics. Such estimates are subjective and involve matters of
judgment and, therefore, are not precise and may not be reasonably comparable to
estimates of fair value for similar instruments made by other financial
institutions.

The estimated fair values do not include the value of assets and liabilities not
considered financial instruments. Additionally, values attributable to deposit
relationships (core deposit intangibles) and consumers (credit card intangibles)
are not reflected.

In order to determine the fair value, cash flows were discounted for each
category or group of loans having similar characteristics, based on credit risk,
guarantees and/or maturities, using rates offered for similar loans by the Bank
at December 31, 2002 and 2001, respectively.

It should be noted, however, that during fiscal 2002, the economic policy (the
repeal of the Convertibility Law, the devaluation of the peso, the compulsory
"asymmetric pesification" of bank assets and liabilities, the restructuring of
deposits, the default on the public debt, among the most significant) and the
inconsistency of its implementation have led to:

-        the abandonment of the monetary and foreign exchange system which had
         been in force for 10 years, including a devaluation of the peso of
         approximately 118%,

-        the compulsory modification by the govemment of most of the contracts
         outstanding between economic agents, which, among others, has
         completely modified the currency denomination of bank assets and
         liabilities as of December 31, 2002 and 2001, and the terms and
         conditions of its assets and liabilities outstanding as of December 31,
         2002 and 2001,

-        the radical change of the regulatory framework for the financial
         system, with the policy implementation measures necessary to complete
         the design of such regulatory framework (including the regulations that
         would establish the exact amount of the compensation to be received by
         banks) still pending,

                                      F-68

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

-        the disruption of macroeconomic equilibrium (already jeopardized by
         year-end 2001), given the magnitude of the devaluation, the pressures
         on the price system and the uncertainty arising from the devaluation
         and the fact that the Argentine Central Bank was allowed to print
         currency,

-        the virtual paralysis of economic activity, which has impacted on
         borrowers' ability to repay loans,

-        an unprecedented level of uncertainty which has prevented us from
         reasonably quantify under Argentine Banking GAAP, Argentine GAAP, U.S.
         GAAP or any other basis the impact of the current Argentine crisis on
         the Group's or the Bank's total assets and liabilities (and its
         relevant components), shareholders' equity and net income (and its
         components) as of and for the year ended December 31, 2001, or any
         period thereafter. Although uncertain, such impact could be material
         and adverse,

Due to the uncertainties derived from the economic crisis existing in Argentina
at the end of 2001 and the economic policy measures taken by the Government to
confront this crisis, the future actual results could differ from the
evaluations and estimates made at the date of the preparation of this
quantitative analysis and these differences could be significant. Therefore, the
following fair values estimated under FAS 107 must be considered in light of
these circumstances.

<TABLE>
<CAPTION>
                                                               GRUPO GALICIA
                                      ----------------------------------------------------------------
                                                                DECEMBER 31,
                                      ----------------------------------------------------------------
                                                   2002                                2001
                                      -------------------------------   ------------------------------
                                        BOOK VALUE       FAIR VALUE        BOOK VALUE     FAIR VALUE
                                      --------------  ---------------   --------------  --------------
<S>                                   <C>             <C>               <C>             <C>
 DERIVATIVE ACTIVITIES: (SEE NOTE 30)
Assets.............................   Ps.         -   Ps.          -    Ps.    13,993   Ps.    14,931
Liabilities........................               -                -                2               2

    NON DERIVATIVE ACTIVITIES:
Assets:
Cash and due from banks (1)........   Ps.   571,853   Ps.    571,853    Ps. 1,130,003       1,130,003
Government securities (2)
   Trading.........................           7,614            7,614          127,872         127,872
   Unlisted Securities.............         145,019          145,019          143,030         143,030
   Investment......................       1,658,463        1,259,917                -               -
Loans (3)..........................      10,589,842        7,986,153       19,933,409      13,927,549
Compensatory and hedge Bond to be
received (4) ......................       7,037,155        3,064,027                -               -
Others (5).........................       2,369,836        2,054,735        3,542,625       2,440,677

Liabilities:
Deposits (6).......................   Ps. 5,164,337   Ps.  4,391,841    Ps.13,386,118  Ps. 13,384,399
Other liabilities resulting from
financial Intermediation :
Central Bank (7)...................       8,051,116        7,586,516        3,401,265       3,401,265
Banks and international entities
and Loans from Domestic Financial
Institutions (8)...................       3,488,960          957,413        2,043,586       1,723,687
Negotiable obligations (9).........       3,550,514        1,595,725        1,855,728       1,193,443
Others (10)........................       1,136,843        1,136,843        2,770,439       2,674,071
</TABLE>

The following is a description of the estimating techniques applied:

(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 at
         December 31, 2002 and 2001 are a reasonable estimate of fair value.

(2)      GOVERNMENT SECURITIES: Government securities held for trading purposes
         and government securities available for sale are carried at fair value.
         The fair value of the Bank's government securities held for investment
         have been estimated using the quoted market value. The book values at
         December 31, 2002 and 2001 of bonds such as Fiscal Credit Certificate,
         Argentine Republic External Bills and National Government Bonds are a
         reasonable estimates their respective fair values.

(3)      LOANS: In order to determine the fair value of loans, the portfolio was
         segregated by loan type, repricing characteristics and credit quality.
         For performing loans, contractual cash flows of loans were discounted
         at estimated market rates. For non-performing loans, expected cash
         flows were

                                      F-69

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

         discounted using an estimated rate considering the time of collection.
         The value of collateral was considered in the estimation of cash flows.

(4)      COMPENSATORY AND HEDGE BOND TO BE RECEIVED: in connection with
         estimating the fair value of the Compensatory Bonds, the Bank used
         quoted market values.

(5)      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" are short-term in nature
         and do not possess significant risk although the fair value of the
         forward purchases of government securities held for investment purposes
         is the quoted market value of the underlying government securities. Are
         also include under this caption the Galtrust I debt securities and
         trust certificates and the estimated fair values of this assets are in
         accordance with SFAS 125. 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. The book value of unquoted equity securities is
         believed by management to approximate fair value.

(6)      DEPOSITS: The fair value of deposit liabilities on demand and savings
         account deposits is similar to its book value. The fair value of term
         deposits was estimated at the expected future cash flows discounted at
         the estimated market rates at year-end, following management's
         expectations.

(7)      CENTRAL BANK: At December 31, 2002 and 2001 "Central Bank" includes
         Argentine Central Bank's liquidity short-term loans and as of December
         31, 2002 also includes includes the advance to be requested for the
         subscription of the Hedge Bond. The fair value was estimated at the
         expected future cash flows discounted at the estimated market rates at
         year-end.

(8)      BANKS AND INTERNATIONAL ENTITIES AND LOANS FROM DOMESTIC FINANCIAL
         INSTITUTIONS: Includes credit lines borrowed under different credit
         arrangements from local and foreign entities. These lines of credit are
         being restructured. Where a market exists in the Bank's debt, the
         quoted market prices have been taken as a best estimate of fair value.
         When no quoted market prices are available, the estimated fair value
         has been calculated by discounting the contractual cash flows of these
         liabilities at estimated market rates.

(9)      NEGOTIABLE OBLIGATIONS: The fair value of the negotiable obligations
         were determined based on quoted market prices. When no quoted market
         prices are available, the estimated fair value has been calculated by
         discounting the contractual cash flows of these liabilities at
         estimated market rates.

(10)     OTHERS: Includes other liabilities resulting from financial brokerage
         the carrying values of which at December 31, 2002 are a reasonable
         estimate of fair value. As of December 31, 2001, also includes the New
         York branch debt securities which fair value were determined based upon
         a discounted cash flow, applying estimated current market rates for the
         remaining terms of the debt securities.

32. CASH DIVIDENDS

On March 15, 2001, the shareholders of Grupo Galicia approved a cash dividend of
Ps.70,753.

Argentine Central Bank Communique "A" 3785 dated October 29, 2002 restricted the
distribution of cash dividends. Such rule establishes that the Bank should
adjust its earnings to be distributed as cash dividends with the difference
between the market value and the carrying value of the compensatory and hedge
bonds after netting the legal reserve and other reserves established by the
Bank's by-laws.

                                      F-70

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

33. PREFERRED LIABILITIES OF THE FORMER BANCO ALMAFUERTE COOP. LTDO., BANCO MAYO
    COOP. LTDO., BANCO MENDOZA S.A. AND BANCO MERCO BANK S.A.

During the years ended June 30, 1999, 2000 and December 31, 2000 and 2001, the
Bank acquired certain interest in a trust sponsored by SEDESA, the Argentine
deposit insurance authority. The trust holds the assets of 3 failed Argentine
banks. The Bank acquired the interests in exchange for the assumption of the
deposit liabilities of the failed banks. The Bank's interest in the trust
consists of preferred certificates A, and subordinated certificates C, whose
payments are guaranteed by SEDESA. At December 31, 2002 and 2001, trust
certificates were recorded at an amount of Ps.33,904 and Ps.64,589,
respectively, in the consolidated financial statements.

Former Banco Almafuerte Coop. Ltdo.

Furthermore, a fund was created for a total amount of US$266,667 to which Banco
de Galicia y Buenos Aires S.A. contributed 45%, US$120,000. This fund, which as
of December 31, 2002 amounted to Ps.170,891 due to its conversion into pesos as
established by Decree 471, may be computable for meeting the Minimum Liquidity
Requirements, as authorized by the Argentine Central Bank. At December 31, 2001,
it amounted to Ps.262,659.

Former Banco Mendoza S.A.

On May 11, 1999, a special fund was set up by Banco de Galicia y Buenos Aires
S.A., Banco de la Nacion Argentina, HSBC Bank Argentina S.A., BBV Banco Frances
S.A. and Banco Credicoop Cooperativo Limitado, as authorized by the Argentine
Central Bank's Board of Directors in points 10 and 13 of its Resolution
N(degree) 179 dated April 16, 1999. This fund was created for a total amount of
US$470,000; Banco de Galicia y Buenos Aires S.A. contributed 10.64%, US$50,000 .
This fund may be computed for meeting the Minimum Liquidity Requirements, as
authorized, by the Argentine Central Bank and as of December 31, 2002 amounted
to Ps. 71,065, due to its conversion into pesos under the terms of Decree 471
(see Note 1). At December 31, 2001, it amounted to Ps.110,040.

34. TRUST ACTIVITIES

SETTING UP OF THE "GALTRUST I" INDIVIDUAL FINANCIAL TRUST

On October 20, 2000 the Bank securitized a group of loans that were granted to
the Argentine Provinces. The taxation revenues from the local provinces
collateralize these loans. The Bank transferred the ownership of the loans to a
trust Galtrust I. In turn the trust issued Class "A" Debt Securities with a face
value of Ps.100,000, Class "B" Debt Securities with a face value of Ps.200,000
and Financial Trust Participation Certificates with a face value of Ps.200,000.
Ps46,922 of the class B Debt Securities were sold to third party invertors and
the remainder of the certificates was retained by the bank.

Under this global program, the Bank transferred the trust ownership of loans
amounting Ps.1,070,855 granted to Argentine provinces collateralized by the
federal tax sharing corresponding to those Provinces and reserve investments for
Ps.16,953, to the GalTrust I Financial Trust in exchange for cash and retained
interest in the trust in the form of Class "A" Debt Securities, Class "B" Debt
Securities and Financial Trust Participation Certificates.

As of December 31, 2001 all class A debt securities were cancelled.

                                      F-71

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

As of December 31, 2002 and 2001, those securities were held in the Bank's
portfolio for Ps.680,230 and Ps.646,698, respectively.

SETTING UP OF THE " GALTRUST II, III, IV AND V " INDIVIDUAL FINANCIAL TRUSTS

At the meeting held on December 6, 2001, the Board of Directors of Banco de
Galicia y Buenos Aires S.A. approved the creation of the Universal Program for
the Securitization of Loans for the issue of debt securities and/or certificates
of participation in Galtrust Financial Trusts. This program was approved by the
National Securities Commission ("the CNV") through its resolution No. 13334
dated April 6, 2000, for a face value of up to US$1,000,000 thousand (the
"Program") and authorized the Bank's participation as originator, trustor and
manager of that program.

The trustee of the trusts is Trust of New York, National Association, through
its permanent representation in Argentina. Four financial trusts, "Galtrust II,
III, IV and V - Letras Hipotecarias", were set up under the above-mentioned
program and Certificates of Participation and Debt Securities were issued under
those trusts.

On December 2001, the Bank transferred the trust ownership of mortgage loans
amounting to Ps.521,294 to the Galtrust II, III, IV and V - Letras Hipotecarias.

The Bank subscribed Certificates of Participation for a face value of Ps.136,839
thousand, in which it had a 100% interest and the remaining Class A and Class B
Debt Securities were subscribed for by the Bank .

As December 26, 2002 the Galtrust III and IV financial trusts were terminated.

As of December 31, 2002 and 2001, the Bank held Certificates of Participation
and Debt Securities in its portfolio for Ps.81,440 (including CER) and
Ps.510.158, respectively.

GALICIA 2004 AND GALICIA 2005 TRUSTS

On November 19, 2001, the beneficiaries of the Galicia 2004 Trust were
designated, as stipulated in the "Framework Trust Agreement" signed on November
4, 1999, to implement an incentive program in favor of certain executives of the
Bank. The total amount of US$4,000 transferred to the trustee by the Galicia
2004 Trust, which was used for the purchase of shares in Grupo Financiero
Galicia S.A., 855,442 shares and 189,116 ADS were acquired.

Shares and ADS of 855,442 and 28,046.60 respectively were awarded. 3,400 ADS
that were not awarded were returned to the trustor. The remaining balance of
157,669.40 ADS was used to create the Galicia 2005 Trust.

GALICIA MORTGAGE LOANS AND SECURED LOANS TRUSTS

As part of the implementation of the Galicia Capitalization and Liquidity Plan,
during April 2002, "Galicia Mortgage Loans Financial Trust" was created, under
which mortgage loans for Ps.312,774 were transferred, receiving in exchange
Ps.234,580 in cash and certificates of participation for Ps.78,194. The trustee
is ABN AMRO Bank Argentine Branch, along with thirteen domestic financial
institutions acting as subscribers. In addition, the Bank has guaranteed the
loans transfered to this trust.

The Secured Loans Trust has been created and the parties involved are Banco de
la Provincia de Buenos Aires as beneficiary and BAPRO Mandatos y Negocios S.A.,
as trustee. Under this Trust, secured loans for

                                      F-72

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Ps.108,000 were transferred and Ps.81,000 in cash and certificates of
participation for Ps.27,000 were received in exchange.
As of December 31, 2002 the amounts of the participation certificates in
"Galicia Mortgage Loans Financial Trust" were Ps.89,639 and the participation
certificates of the "Secured Loans Trust" were Ps.27,000.

35. PURCHASE OF REGIONAL CREDIT CARD ISSUING COMPANIES

Tarjetas Regionales S.A. is a holding company, which as of December 31, 2001,
was wholly owned by Grupo Financiero Galicia S.A. through its subsidiaries Banco
Galicia Uruguay S.A. and Banco de Galicia y Buenos Aires S.A.

As of December 31, 2001, the total goodwill value for the acquisition of the
regional-credit-card companies, which includes the goodwill for the companies
previously acquired, amounted to Ps.152,108 and, net of accumulated amortization
of Ps.39,075, to Ps.113,033. Under Argentine Banking GAAP this goodwill is being
amortized over ten years.

During September 1999, Tarjetas Regionales S.A. sold to BAPRO Medios de Pago
S.A. 3,400 ordinary shares of Tarjetas del Mar S.A. that represented the 17% of
this company's capital stock. The total price of the transaction amounted to
Ps.4,710 and the Bank recorded a gain of Ps.2,921.

During January 2000, Tarjetas Regionales S.A purchased from Credit Card
Financing Corp. 182,162 ordinary shares of Tarjetas del Sur S.A to increase its
interest in this company's capital stock from 12.5% to 60%. The price paid for
these shares was Ps.15,291.

During February 2000, Tarjeta Naranja S.A purchased from Sociedad Anonima
Importadora y Exportadora de la Patagonia its interest in Tarjetas del Sur S.A,
which represents 40% of the shares in this company, increasing the Bank's
interest to 92%.The price paid for these shares was Ps.10,485.

On July 4, 2000, Tarjeta Naranja S.A. acquired 3,600,000 shares representing 40%
of the capital stock and voting rights of Tarjeta Comfiar S.A., increasing the
Bank's interest to 92%.

On March 29, 2001, Tarjetas del Sur S.A. l merged into Tarjeta Naranja S.A.

On December 28, 2001, the Board of Directors of Tarjetas Regionales S.A.
accepted the contribution made by its shareholder Banco de Galicia y Buenos
Aires S.A. consisting of all credits held in that company by Banco de Galicia y
Buenos Aires S.A. for an amount of Ps.145,338 as irrevocable capital
contributions on account of future issues of shares.

During the first quarter of fiscal year 2001, Tarjetas Regionales S.A. sold part
of interest (12%) in Tarjetas del Sur S.A. for Ps.3,146.

On January 15, 2002, the Extraordinary meeting of the shareholders of Tarjetas
Regionales S.A. resolved to increase its capital stock to Ps.212,733 through the
issue of 70,734,148 ordinary, book entry shares with a face value of Ps.1 each,
entitled to one vote per share. Those shares have been fully subscribed and paid
up by the shareholder Banco de Galicia y Buenos Aires S.A. As a result, the new
interest percentages held by the shareholders in that company are as follows:
Banco de Galicia y Buenos Aires S.A. 68.22% of the capital stock and voting
rights and Banco de Galicia (Cayman) Ltd., the remaining 31.78%.

During May, 2002, Tarjetas Regionales S.A. purchased from Grupo BAPRO S.A.
10,000 ordinary shares of Tarjetas del Mar S.A. to increase its interest in this
company's capital stock from 50% to 99,99%. The price

                                      F-73

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

paid for these shares was Ps.3,097. Additionaly, during august, 2002, Tarjetas
Regionales S.A. sold to Tarjeta Naranja S.A. 1 ordinary share of Tarjetas del
Mar S.A.

Tarjetas del Mar S.A.:

In January 2002, Tarjetas del Mar S.A. received a Ps.11,200 60-day loan from
Banco de Galicia y Buenos Aires S.A. to be used for settlement of its issue of
Series IX Negotiable Obligations.

On March 4, 2002, Tarjetas del Mar S.A. informed the Buenos Aires Stock Exchange
and the National Securities Commission ("the CNV") that it had resolved to
propose to the holders of the Series X Negotiable Obligations for US$
15,400,000, due March 5, 2002, the postponement of their due date for 120 days,
during which period interest would be paid monthly in advance at an annual rate
of 14.92%. On June 18, 2002, Tarjetas del Mar S.A. informed the Buenos Aires
Stock Exchange and the CNV that it had resolved to propose to the holders of
these negotiable obligations an additional 120-day postponement of their due
date.

Tarjeta Comfiar S.A.:

On January 2002, Series IX Negotiable Obligations for US$25,000,000 matured.
Tarjeta Comfiar S.A. settled this amount on maturity as follows:

         - US$22,423,000 were repaid by means of a loan from Banco de Galicia y
         Buenos Aires S.A.s Grand Cayman Branch.

         - US$312,000 were paid in cash and an agreement with investors is still
         pending on the remaining principal of Ps.2,265,000

Tarjeta Naranja S.A.:

During January 2002, Tarjeta Naranja S.A. placed the full amount of Series XXVII
Negotiable Obligations for US$28,000,000 for a term of 344 days.

On May 23, 2002, Tarjeta Naranja S.A. signed a Trust Agreement ("the Agreement")
with the holders of these negotiable obligations, pursuant to which a 4.5% of
such company's monthly cash-flows will be reserved, during eight years, for the
payment of the debt certificate issued as a consequence of this agreement. The
series of negotiable obligation included in the Agreement are Series VI, VII,
XXV, XXVIII and XXIX issued by Tarjeta Naranja S.A. To date the amount included
in the Trust is approximately US$59,000,000. There is still a negotiation going
on with a group of investors that did not accept the Agreement yet, for an
approximately principal amount of US$9,250,000.

Tarjetas Cuyanas S.A.:

During January 2002, Series IX Negotiable Obligations were repaid. As a result a
liability arose with Banco Galicia for Ps.8,000.

On January 23, 2002, Series XII Negotiable Obligations for US$12,000,000 were
issued, maturing on April 23, 2002, and Series IX and X Negotiable Obligations
were repaid.

On May 23, 2002, Tarjetas Cuyanas S.A. signed an agreement ("the Agreement")
with the holders of these negotiable obligations, pursuant to which a 5% of such
company's monthly cash-flows, will be destined, during eight years, for the
payment of the debt certificate issued as a consequence of the Agreement. To
date the amount included in the Trust is approximately US$5,000,000. There is
still a negotiation going on with a

                                      F-74

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

group of investors that did not accept this agreement yet, for approximately
amount of US$5,600,000. The remaining amount was paid in cash.

36. SEGMENT REPORTING

The Bank has disclosed its segment information in accordance with the Statement
of Financial Accounting Standards No. 131, "Disclosures about Segment of an
Enterprise and Related Information". This standard establishes standards for
reporting information about operating segments. Operating segments are defined
as components of an enterprise about which separate financial information is
available and which is regularly reviewed by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. Reportable
segments consist of one or more operating segments with similar economic
characteristics, distribution systems and regulatory environment. The
information provided for Segment Reporting is based on internal reports used by
management.

The following summarizes the aggregation of Grupo Galicia's operating segments
into reportable segments:

Grupo Galicia: this segment includes the income and expenses related to the
Holding Company, not attributable to its investments.

Insurance: includes the results of Grupo Galicia's equity interest in the
insurance companies. At December 31, 2002 and 2001, Grupo Galicia maintained,
through its subsidiary Sudamericana Holding S.A., controlling interests in
Galicia Vida Compania de Seguros S.A., Galicia Retiro Compania de Seguros S.A.,
Instituto de Salta Seguros de Vida S.A., Aseguradora de Personas Galicia S.A.,
Sudamericana Asesores de Seguros S.A. and Medigap Salud S.A.

Other Group's Businesses: this segment includes the results of the business of
Galicia Warrants S.A. and Net Investment S.A. and its subsidiaries.

Buenos Aires Metropolitan branches: corresponds to the results of operations
conducted with large corporations, small and medium-sized companies and
individuals in branches located in the Federal Capital and Greater Buenos Aires
(where the relatively greater economic activity occurs).

Branches throughout the rest of the country: this segment includes the results
of operations with large corporations, small and medium-sized companies and
individuals in the branches located in the rest of the country.

Home office: includes the results of operations with customers (large
corporations, small and medium-sized companies and individuals) located in it,
as well as the results of operations with the national and provincial public
sectors.

Regional credit card companies: includes the results of the Bank's equity
interests in the regional credit card companies. At December 31, 2002 and 2001,
the Bank maintained, through its subsidiary Tarjetas Regionales S.A.,
controlling interests in Tarjeta Naranja S.A. (80%) in the province of Cordoba,
Tarjetas Cuyanas S.A. (60%) in the province of Mendoza, Tarjeta Comfiar (92%) in
the Province of Santa Fe, and Tarjetas del Mar (99,99% and 50% in 2002 and 2001,
respectively) in the Province of Buenos Aires.

International: the results of operations conducted through Banco Galicia Uruguay
S.A., Banco de Galicia Cayman Ltd., the New York and Cayman branches, except for
the operations carried out with customers located in some of the regions
mentioned above.

                                      F-75

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Other financial business: This segment mainly includes the results of the
business of Galicia Capital Markets S.A., Galicia Valores S.A. Sociedad de
Bolsa, Agro Galicia S.A. and Galicia Factoring y Leasing S.A.

Other equity investments: Includes the results of the capital expenditures made
by the Bank as minority interest in a variety of infrastructure and public
utility service companies, such as Aguas Argentinas S.A., Correo Argentino S.A.,
Inversora Nihuiles S.A., Inversora Diamante S.A., etc.

Overhead and corporate adjustments: Includes the results of the operations that
can not be allocated to the segments above and the results of the operations
conducted between the aforementioned segments.

The Bank evaluates segment performance based on net income. The table below
shows the segment information for continuing operations for the years ended
December 31, 2002 and 2001, for the six-month period ended December 31, 2000 and
for the fiscal year ended June 30, 2000:

                                      F-76

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA
                           ----------------------------------------------------------------------------------------------
                                          Buenos Aires     Rest of the                         Regional
YEAR ENDED DECEMBER 31,      Grupo        Metropolitan       Country           Head             Credit         Interna-
2002                        Galicia         Branches         Branches         Office            Cards           tional
                           ---------      ------------     -----------      ----------         ---------      -----------
<S>                        <C>            <C>              <C>              <C>                <C>            <C>
Net Financial Income        204,493           69,354           79,598        1,947,211          (17,099)      (1,508,537)

Net Income from
Services                         (2)         148,175           82,735           (3,312)         141,809           (2,464)

Provision for Loan
Losses                            -          236,770          247,686          815,045          104,856          229,937

Monetary Results           (167,026)               -                -       (1,241,659)               -                -

Operating Income             37,465          (19,241)         (85,353)        (112,805)          19,854       (1,740,938)

Operating Expenses            7,068          197,263          139,463          377,011          112,556           74,187

Monetary results of
operating expenses              227            5,559            3,930           11,103                -                -

Other Income (Loss)          (2,793)           6,912            7,520         (602,127)         (57,133)         (87,584)

Monetary results of
other income                    400            1,565            1,466          114,917         (259,612)          (2,109)

Minority Interest                 -                -                -                -           76,423           72,402

Pre-tax Income               28,231         (202,468)        (211,900)        (965,923)        (333,024)      (1,832,416)

Income tax provision         58,732                -                -                -              394              679

Net Income before
the Absorption              (30,501)        (202,468)        (211,900)        (965,923)        (333,418)      (1,833,095)

Absorption subject
to the Approval of
the Annual
Shareholders
Meeting(*)                        -                -                -                -                -                -

Net income after the
Absorption                  (30,501)        (202,468)        (211,900)        (965,923)        (333,418)      (1,833,095)

Net Income as a
Percentage of
Consolidated Net
Income                            1%               7%               8%              34%              12%              65%

Average Loans                     -        1,810,216        1,684,080        9,107,333          312,451        2,216,420

Average Deposits                  -        2,050,886        1,387,230        3,172,562                -        2,269,565

<CAPTION>
                                                                   GRUPO GALICIA
                            ----------------------------------------------------------------------------------------------
                              Other           Other                              Other       Overhead and
YEAR ENDED DECEMBER 31,     Financial         Equity          Insurance         Gruop's        Corporate      Consolidated
2002                        Businesses      Investments       Business         Businesses     Adjustments        Total
                            ----------      -----------       ---------        ----------    ------------     ------------
<S>                         <C>             <C>               <C>              <C>           <C>              <C>
Net Financial Income           7,315                -          (44,788)           1,326          487,700        1,226,573

Net Income from
Services                       8,222                -           (5,590)           5,262           (2,694)         372,141

Provision for Loan
Losses                            34                -                -                -                -        1,634,328

Monetary Results             (16,634)                                -                -                -       (1,425,319)

Operating Income              (1,131)               -          (50,378)           6,588          485,006       (1,460,933)

Operating Expenses            10,522                -           22,894            7,388           (9,027)         939,325

Monetary results of
operating expenses                 -                -                -                -                -           20,819

Other Income (Loss)           12,306          (50,701)          85,653           (4,595)         215,280         (477,262)

Monetary results of
other income                  (1,324)               -          (14,576)          (2,407)               -         (161,680)

Minority Interest               (132)               -               19                -          118,530          267,242

Pre-tax Income                  (803)         (50,701)          (2,176)          (7,802)         827,843       (2,751,139)

Income tax provision           5,401                -                -              641                -           65,847

Net Income before
the Absorption                (6,204)         (50,701)          (2,176)          (8,443)         827,843       (2,816,986)

Absorption subject
to the Approval of
the Annual
Shareholders
Meeting(*)                         -                -                -                -        1,358,193        1,358,193

Net income after the
Absorption                    (6,204)         (50,701)          (2,176)          (8,443)       2,186,036       (1,458,793)

Net Income as a
Percentage of
Consolidated Net
Income                             0%               2%               0%               0%             (29%)            100%

Average Loans                      -                -                -                -                -       15,130,500

Average Deposits                   -                -                -                -          (84,123)       8,796,120
</TABLE>

(*) Effect on the foreign currency position compensation.

                                      F-77

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA
                             ----------------------------------------------------------------------------------------
                                          Buenos Aires    Rest of the                        Regional
YEAR ENDED DECEMBER 31,       Grupo       Metropolitan      Country           Head            Credit         Interna-
2001                         Galicia        Branches        Branches         Office           Cards           tional
                             -------       ----------      ----------      ----------        --------       ---------
<S>                          <C>           <C>             <C>             <C>               <C>            <C>
Net Financial Income          1,166          471,324         298,938         799,476         110,392          146,444

Net Income from
Services                         (4)         313,259         171,160          93,366         308,678           19,304

Provision for Loan
Losses                            -          211,531         177,270         436,502         150,107           24,388

Operating Income              1,162          573,052         292,828         456,340         268,963          141,360

Operating Expenses            7,401          494,190         336,523         165,865         251,678           76,035

Other Income (Loss)          (2,152)          29,238          49,578          21,849            (179)          21,814

Minority Interest                 -                -               -               -          (4,345)           3,941

Pre-tax Income               (8,391)         108,100           5,883         312,324          12,761           91,080

Income tax provision              -           44,025           2,397         127,194          21,803            2,108

Net Income                   (8,391)          64,075           3,486         185,130          (9,042)          88,972

Net Income as a
percentage of
Consolidated Net
Income                           (3%)             24%              1%             71%             (4%)             34%

Average Loans                     -        3,989,682       3,623,844       9,067,434         924,418        2,223,915

Average Deposits                  -        7,874,385       4,967,221       4,530,953               -        1,177,586

<CAPTION>
                                                                   GRUPO GALICIA
                           ----------------------------------------------------------------------------------------------
                             Other            Other                              Other       Overhead and
YEAR ENDED DECEMBER 31,    Financial          Equity         Insurance         Gruop's         Corporate     Consolidated
2002                       Businesses       Investments       Business        Businesses      Adjustments        Total
                           ----------       -----------       --------        ----------     ------------    ------------
<S>                        <C>              <C>               <C>             <C>            <C>             <C>
Net Financial Income           (629)               -           10,481              306         (389,856)       1,448,042

Net Income from
Services                     43,533                -          (10,162)           4,578           (9,157)         934,555

Provision for Loan
Losses                            -                -                -                -                -          999,798

Operating Income             42,904                -              319            4,884         (399,013)       1,382,799

Operating Expenses           29,415                -           20,309            6,050          (29,317)       1,358,149

Other Income (Loss)           5,295           (3,253)          20,274             (527)         275,311          417,248

Minority Interest              (247)               -              (98)              41          (21,259)         (21,967)

Pre-tax Income               18,537           (3,253)             186           (1,652)        (115,644)         419,931

Income tax provision          3,530                -                -              480          (43,860)         157,677

Net Income                   15,007           (3,253)             186           (2,132)         (71,784)         262,254

Net Income as a
percentage of
Consolidated Net
Income                            6%              (1%)              0%              (1%)            (27%)            100%

Average Loans                     -                -                -                -                -       19,829,293

Average Deposits                  -                -                -                -          (97,775)      18,452,370
</TABLE>

<TABLE>
<CAPTION>
                                                                  GRUPO GALICIA
                             ----------------------------------------------------------------------------------------
                                          Buenos Aires    Rest of the                        Regional
SIX-MONTH ENDED               Grupo        Metropolit       Country           Head            Credit         Interna-
DECEMBER 31, 2000            Galicia        Branches        Branches         Office           Cards           tional
                             -------      ------------    -----------      ---------         --------       ---------
<S>                          <C>          <C>             <C>              <C>               <C>            <C>
Net Financial Income          2,787          257,478         171,739         285,025          70,089           58,791

Net Income from
Services                          -          143,215          83,338          45,370         122,719            5,773

Provision for Loan
Losses                            -          103,585          88,517          21,108          54,731            2,230

Operating Income              2,787          297,108         166,560         309,287         138,077           62,334

Operating Expenses            1,994          242,049         173,751          55,692         111,228           26,702

Other Income (Loss)            (911)          12,722          10,970          20,732          (9,618)          (7,126)

Minority Interest                 -                -               -               -             268                -

Pre-tax Income                 (118)          67,781           3,779         274,327          17,499           28,506

Income tax provision              -           22,071           1,230          89,332          22,397              596

Net Income                     (118)          45,710           2,549         184,995          (4,898)          27,910

Net Income as a
percentage of
Consolidated Net
Income                            0%              23%              1%             94%             (2%)             14%

Average Loans                     -        4,043,023       3,879,810       8,953,104         841,849        1,788,649

Average Deposits                  -        8,047,253       5,028,112       5,055,377               -        1,033,668

<CAPTION>
                                                        GRUPO GALICIA
                                -------------------------------------------------------------
                                  Other            Other        Overhead and
SIX-MONTH ENDED DECEMBER 31,    Financial          Equity         Corporate     Consolidated
2002                            Businesses       Investments     Adjustments        Total
                                ----------       -----------    -------------   ------------
<S>                             <C>              <C>            <C>             <C>
Net Financial Income               1,930                -          (23,330)         824,509

Net Income from
Services                          21,171                -           (3,746)         417,840

Provision for Loan
Losses                                 -                -                -          270,171

Operating Income                  23,101                -          (27,076)         972,178

Operating Expenses                12,869                -           35,165          659,450

Other Income (Loss)                2,055           (4,037)         (12,930)          11,857

Minority Interest                    (11)               -          (14,036)         (13,779)

Pre-tax Income                    12,276           (4,037)         (89,207)         310,806

Income tax provision               3,264                -          (24,485)         114,405

Net Income                         9,012           (4,037)         (64,722)         196,401

Net Income as a
percentage of
Consolidated Net
Income                                 5%              (2%)            (33%)            100%

Average Loans                          -                -                -       19,506,435

Average Deposits                       -                -         (147,285)      19,017,125
</TABLE>

                                      F-78

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

<TABLE>
<CAPTION>
                                                          BANCO GALICIA
                             -------------------------------------------------------------------------
                             Buenos Aires   Rest of the                      Regional
                             Metropolitan     Country          Head           Credit
                               Branches       Branches        Office          Cards      International
                             ------------   -----------     ---------        -------     -------------
YEAR ENDED JUNE 30, 2000
<S>                          <C>            <C>             <C>              <C>         <C>
Net Financial Income            458,147        342,703        517,152        189,951         113,215

Net Income from Services        285,122        171,599         79,641        161,820          13,836

Provision for Loan Losses       160,907        152,593        104,367        126,266           8,432

Operating Income                582,362        361,709        492,426        225,505         118,619

Operating Expenses              462,448        347,685         77,209        187,074          46,213

Other Income (Loss)              18,215         19,977         33,108         (8,039)        (26,371)

Minority Interest                     -              -              -            677               -

Pre-tax Income                  138,129         34,001        448,325         31,069          46,035

Income tax provision             42,126         10,369        139,060         34,029             771

Net Income                       96,003         23,632        309,265         (2,960)         45,264

Net Income as a
percentage of
Consolidated Net
Income                               28%             7%            91%            (1%)            14%

Average Loans                 3,715,579      3,758,915      7,386,892        711,426       2,522,098

Average Deposits              7,496,739      4,744,749      4,660,736              -         847,845

<CAPTION>
                                                    BANCO GALICIA
                             --------------------------------------------------------
                                                            Overhead
                               Other            Other         and
                             Financial          Equity      Corporate    Consolidated
                             Businesses       Investment   Adjustments      Totals
                             ----------       ----------   -----------   ------------
YEAR ENDED JUNE 30, 2000
<S>                          <C>              <C>          <C>           <C>
Net Financial Income            4,068               -        (45,907)      1,579,329

Net Income from Services       53,754               -        (18,076)        747,696

Provision for Loan Losses           -               -         (7,626)        544,939

Operating Income               57,822               -        (56,357)      1,782,086

Operating Expenses             26,240               -        180,365       1,327,234

Other Income (Loss)             7,180           4,716           (671)         48,115

Minority Interest                 (26)              -              -             651

Pre-tax Income                 38,736           4,716       (237,393)        503,618

Income tax provision           10,513               -        (74,727)        162,141

Net Income                     28,223           4,716       (162,666)        341,477

Net Income as a
percentage of
Consolidated Net
Income                              8%              1%           (48%)           100%

Average Loans                       -               -              -      18,094,910

Average Deposits                    -               -              -      17,750,069
</TABLE>

37. SUBSEQUENT EVENTS

On March 28, 2003, Argentine Central Bank released Communique "A" 3911
substantially modifying the accounting criterion for certain financing to the
public sector. This Communique establishes that Secured Loans, government
securities not subject to the minimum capital requirement to cover market risk,
which are mainly those which are not listed on stock exchanges, promissory notes
issued by the Fiduciary Fund for the Provincial Development and other financing
to the public sector, which financial institutions held in their portfolio at
that date or will add to it in the future, must be recognized at the lower value
arising from comparing their "present value" to their "technical value". The
former is defined as the "net present value" of a cash flow structure,
determined under contractual conditions, and discounted at a rate of 3% set by
the Argentine Central Bank until December 2003. The "technical value" is the
index-adjusted amount of each instrument under contractual conditions.

On June 15, 2003, the Galia 2004 trust was terminated due to its high
maintenance cost. The shares and ADS contributed to that trust by the Bank were
delivered to its beneficiaries.

38. DIFFERENCES BETWEEN ARGENTINE CENTRAL BANK RULES AND PROFESSIONAL ACCOUNTING
STANDARDS

INVESTMENT SECURITIES

As of December 31, 2002, the Group has classified as Investment Securities, the
portion of its BODENs US$ 2012, received in compensation from the Argentine
Central Bank. These securities are recorded at its technical value increased on
the basis of interest accrued under the issue terms and conditions, and that
foreign currency balance is converted into pesos at the reference exchange rate
published by the Argentine Central Bank on the last business day of the fiscal
year. Under Argentine Generally Accepted Accounting Principles applicable to
enterprises in general these securities should be marked to market with the
resulting gain or loss reflected in the income statement. There has been limited
activity in the trading of these securities and as such, the quoted market
values may not represent the price of an actual sale between a willing buyer and
a willing seller.

                                      F-79

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

COMPENSATION TO BE RECEIVED FROM THE NATIONAL GOVERNMENT

As of December 31, 2002, the Group has accounted for BODENs US$ 2012,
recognizing the right to receive in compensation form Argentine Central Bank, as
"Compensation to be received from the National Government" under "Other
Receivables Resulting from Financial Brokerage". These assets are recorded at
its technical value increased on the basis of interest accrued under the issue
terms and conditions, and the foreign currency balance is converted into pesos
at the exchange rate published by the Argentine Central Bank on the last
business day of the fiscal year. Under Argentine Generally Accepted Accounting
Principles applicable to enterprises in general these assets should be accounted
for at the market value of the securities to be received with the resulting gain
or loss reflected in the income statement. There has been limited activity in
the trading of these securities and as such, the quoted market values may not
represent the price of an actual sale between a willing buyer and a willing
seller.

SECURED LOANS

On November 6, 2001, the Group presented its offer in connection with the
exchange of Argentine government securities for secured loans, as established by
Decree 1387/01 issued by the Argentine Government. The inception value of the
secured loans was determined taking into account the exchange ratio established
by the Ministry of Economy (face value plus interest accrued until November 6,
2001, less coupons receivable until November 30, 2001), whereas the securities
delivered in exchange were written off at their book value, net of the servicing
of principal and interest receivable between November 6 and 30, 2001. Under
Argentine GAAP to enterprises that exchange should be accounted for at the
market value of the securities exchanged with the resulting gain or loss
reflected in the income statement.

ALLOWANCE FOR LOAN LOSSES - NON-FINANCIAL PUBLIC SECTOR

Under Argentine Central Bank rules, banks must maintain reserves for loan losses
in an amount appropriate to cover the risks underlying each bank's, except for
the Public Sector. Under Argentine Generally Accepted Accounting Principles
these loans should be provisioned according to the risk underlying this
portfolio.

39. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ARGENTINE CENTRAL BANK RULES AND
UNITED STATES ACCOUNTING PRINCIPLES

The following is a description of the significant differences between Argentine
Banking GAAP and those applicable in the United States under generally accepted
accounting principles ("U.S. GAAP"). References below to "SFAS" are to United
States Statements of Financial Accounting Standards.

The differences below do not include the reversal of the adjustments to the
financial statements for the effects of inflation required under Argentine
Banking GAAP as the application of inflation accounting represents a
comprehensive measure of the effects of wholesale price level changes in the
Argentine economy and as such, is considered a more meaningful presentation than
historical-based financial reporting for U.S. GAAP purposes.

A. INCOME TAXES

Argentine Central Bank regulations does not require the recognition of deferred
tax assets and liabilities and therefore income taxes are recognized on the
basis of amounts due in accordance with Argentine tax regulations. This method
was applied to Banco Galicia. However, the Group's non-bank subsidiaries applied
the deferred income tax method. As a result, the Group's non-bank subsidiaries
recognized a deferred tax asset.

                                      F-80

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

For the purposes of U.S. GAAP reporting, the Group applies SFAS No. 109
"Accounting for Income Taxes". Under this method, income taxes are recognized
based on the liability method whereby deferred tax assets and liabilities are
established for temporary differences between the financial reporting and tax
bases of the Bank's assets and liabilities. Deferred tax assets are recognized
if it is more likely than not that such assets will be realized.

Under U.S. GAAP the deferred tax asset related recognized by the Group's
non-bank subsidiaries was reversed.

At December 31, 2000, the Group had an additional reserve of Ps. 44,481 which
was reversed.

Deferred tax assets (liabilities) are summarized as follows:

<TABLE>
<CAPTION>
                                                                                         GRUPO GALICIA
                                                                      ---------------------------------------------------
                                                                                  YEAR ENDED DECEMBER 31, 2002
                                                                      ---------------------------------------------------
                                                                         SFAS 109
                                                                        applied to     SFAS 109 applied
                                                                      Argentine GAAP     to U.S. GAAP
                                                                        balances          adjustments        SFAS 109
                                                                      --------------   ----------------   ---------------
<S>                                                                   <C>              <C>                <C>
Deferred tax assets
Allowance for loan losses - private sector.........................          291,824            (16,583)          275,241
Allowance for loan losses - public sector..........................                -            522,805           522,805
Compensation and hedge bonds                                              (1,260,235)         1,459,449           199,214
Impairment of intangible assets....................................                -             10,794            10,794
Allowance for equity in other companies............................                -                  -                 -
Impairment of fixed assets and foreclosed assets                                   -             23,301            23,301
Liabilities........................................................           34,986                  -            34,986
Provision for contingencies........................................          127,827                  -           127,827
Others.............................................................           (9,241)            15,427             6,186
Loss carry forward.................................................        1,220,032                  -         1,220,032
                                                                      --------------   ----------------   ---------------
Total gross deferred tax assets....................................   Ps.    405,193   Ps.    2,015,193   Ps.   2,420,386
Deferred tax liabilities:

Investments........................................................   Ps.          -   Ps.            -   Ps.           -
Depreciation of fixed assets.......................................           (1,598)                 -            (1,598)
Amortization of intangible assets..................................           (2,634)               (78)           (2,712)
Foreign exchange loss..............................................          (53,664)                 -           (53,664)
                                                                      --------------   ----------------   ---------------
Total gross deferred tax liabilities...............................   Ps.    (57,896)  Ps.          (78)  Ps.     (57,974)

                                                                      --------------   ----------------   ---------------
Net deferred income tax asset before valuation allowance              Ps.    347,297   Ps.    2,015,115   Ps.   2,362,412

                                                                      --------------   ----------------   ---------------
Valuation allowance................................................         (400,961)        (2,015,115)       (2,416,076)
                                                                      --------------   ----------------   ---------------
Net deferred income tax............................................   Ps.    (53,664)  Ps.            -   Ps.     (53,664)
                                                                      --------------   ----------------   ---------------
</TABLE>

                                      F-81

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

<TABLE>
<CAPTION>
                                                                                         GRUPO GALICIA
                                                                      ---------------------------------------------------
                                                                                  YEAR ENDED DECEMBER 31, 2001
                                                                      ---------------------------------------------------
                                                                         SFAS 109
                                                                        applied to     SFAS 109 applied
                                                                      Argentine GAAP     to U.S. GAAP
                                                                        balances          adjustments        SFAS 109
                                                                      --------------   ----------------   ---------------
<S>                                                                   <C>              <C>                <C>
Deferred tax assets
Allowance for loan losses - private sector.........................          101,525            335,025           436,550
Allowance for loan losses - public sector..........................                -          2,138,622         2,138,622
Amortization of intangible assets..................................            9,194             36,969            46,163
Impairment of intangible assets....................................                -             34,195            34,195
Allowance for equity in other companies............................                -             22,975            22,975
Foreign exchange loss..............................................                -            593,125           593,125
Liabilities........................................................           15,273                  -            15,273
Provision for contingencies........................................           22,932                  -            22,932
Others.............................................................           20,129             (1,651)           18,478
Loss carry forward.................................................          233,436                  -           233,436
                                                                      --------------   ----------------   ---------------
Total gross deferred tax assets....................................   Ps.    402,489   Ps.    3,159,260   Ps.   3,561,749
Deferred tax liabilities:

Investments........................................................   Ps.    (51,441)  Ps.       57,037   Ps.       5,596
Depreciation of fixed assets.......................................          (16,062)                 -           (16,062)

                                                                      --------------   ----------------   ---------------
Total gross deferred tax liabilities...............................   Ps.    (67,503)  Ps.       57,037   Ps.     (10,466)

                                                                      --------------   ----------------   ---------------
Net deferred income tax asset before valuation allowance              Ps.    334,986   Ps.    3,216,297   Ps.   3,551,283
Valuation allowance................................................         (334,986)        (3,216,297)       (3.551,283)
                                                                      --------------   ----------------   ---------------
Net deferred income tax............................................   Ps.          -   Ps.            -   Ps.           -
                                                                      --------------   ----------------   ---------------
</TABLE>

                                      F-82

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

<TABLE>
<CAPTION>
                                                                                         GRUPO GALICIA
                                                                      ---------------------------------------------------
                                                                               SIX-MONTHS ENDED DECEMBER 31, 2002
                                                                      ---------------------------------------------------
                                                                         SFAS 109
                                                                        applied to     SFAS 109 applied
                                                                      Argentine GAAP     to U.S. GAAP
                                                                        balances          adjustments        SFAS 109
                                                                      --------------   ----------------   ---------------
<S>                                                                   <C>              <C>                <C>
Deferred tax assets
Structured notes...................................................   Ps.          -   Ps.       43,920   Ps.      43,920
Allowance for loan losses..........................................           55,840              7,665            63,505
Amortization of intangible assets..................................            5,446             25,518            30,964
Liabilities........................................................            6,027                  -             6,027
Provision for contingencies........................................           10,911                  -            10,911
Loss carry forward.................................................           21,025                  -            21,025
                                                                      --------------   ----------------   ---------------
Total gross deferred tax assets....................................   Ps.     99,249   Ps.       77,103   Ps.     176,352

Deferred tax liabilities

Investments........................................................   Ps.    (83,373)  Ps.       60,347   Ps.     (23,026)
Depreciation of fixed assets.......................................          (37,528)                 -           (37,528)
Others.............................................................              177             (6,975)           (6,798)
                                                                      --------------   ----------------   ---------------
Total gross deferred tax liabilities...............................   Ps.   (120,724)  Ps.       53,372   Ps.     (67,352)

                                                                      --------------   ----------------   ---------------
Net deferred income tax (liability) asset..........................   Ps.    (21,475)  Ps.      130,475   Ps.     109,000
                                                                      --------------   ----------------   ---------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                         BANCO GALICIA
                                                                      ---------------------------------------------------
                                                                                   YEARS ENDED JUNE 30, 2000
                                                                      ---------------------------------------------------
                                                                         SFAS 109
                                                                        applied to     SFAS 109 applied
                                                                      Argentine GAAP     to U.S. GAAP
                                                                        balances          adjustments        SFAS 109
                                                                      --------------   ----------------   ---------------
<S>                                                                   <C>              <C>                <C>
Deferred tax assets
Structured notes...................................................                -   Ps.       45,975   Ps.      45,975
Allowance for loan losses..........................................   Ps.     50,562             11,601            62,163
Amortization of intangible assets..................................            2,634             26,364            28,998
Liabilities........................................................            7,091                  -             7,091
Provision for contingencies........................................            9,419                  -             9,419
Loss carryforward..................................................           16,686                  -            16,886
Others.............................................................              153              6,337             6,490
                                                                      --------------   ----------------   ---------------
Total gross deferred tax assets....................................   Ps.     86,545   Ps.       90,277   Ps.     177,022

Deferred tax liabilities
Investments........................................................   Ps.    (80,511)  Ps.       46,657   Ps.     (33,854)
Depreciation of fixed assets.......................................          (47,981)                 -           (47,981)
                                                                      --------------   ----------------   ---------------
Total gross deferred tax liabilities...............................   Ps.   (128,492)  Ps.       46,657   Ps.     (81,835)

                                                                      --------------   ----------------   ---------------
Net deferred income tax (liability) asset..........................   Ps.    (41,947)  Ps.      136,934   Ps.      95,187
                                                                      --------------   ----------------   ---------------
</TABLE>

                                      F-83

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

The following table accounts for the difference between the actual tax provision
and the amounts obtained by applying the statutory income tax rate in Argentina
to Income before income tax, calculated on the basis of U.S. GAAP for the years
ended December 31, 2002 and 2001, for the six-month period ended December 31,
2000 and for the year ended June 30, 2000.

<TABLE>
<CAPTION>
                                                                       GRUPO GALICIA                            BANCO GALICIA
                                                         --------------------------------------------------     --------------
                                                                                              SIX-MONTHS
                                                                FISCAL YEARS ENDED              ENDED            FISCAL YEAR
                                                                    DECEMBER 31,             DECEMBER 31,       ENDED JUNE 30,
                                                         --------------------------------------------------     --------------
                                                              2002             2001             2000                 2000
                                                         --------------   ---------------------------------     --------------
<S>                                                      <C>              <C>               <C>                 <C>
Statutory income tax rate.............................             35.0%            35.0%              35.0%              35.0%
Tax provision computed by applying the statutory
rate to the income before taxation calculated in
accordance with U.S. GAAP.............................   Ps.    146,594       (2,923,399)    Ps.    110,702     Ps.    176,073
Tax exempt income.....................................       (2,496,823)        (465,369)           (12,853)           (33,327)
Effect of the change in the rate under which
temporary Differences will reverse....................                -                -                  -                  -
Reversal of deferred income taxes under U.S. GAAP                     -            8,971                  -                  -
Reversal of deferred tax set-up under Argentine GAAP                  -           44,481                  -                  -
Valuation allowance (1)...............................        2,416,076        3,551,283                  -                  -
Other.................................................                -           (4,838)             3,709              1,981
                                                         --------------   ---------------------------------     --------------
Actual tax provision under U.S. GAAP..................   Ps.    65,847    Ps.    211,129     Ps.    101,558     Ps.    144,727
                                                         ==============   =================================     ==============
</TABLE>

(1) Valuation allowance: as described in Note 1 to the Group's financial
statements, there is substantial doubt of the Group's ability to continue as a
going concern. This situation constitutes significant negative evidence under
FAS 109 as to the realizability of deferred tax assets and thus, a valuation
allowance would be required for all deferred tax assets that are not assured of
realization by either (1) carryback to prior years or (2) reversal of existing
taxable temporary differences. The Group provided a full reserve of its deferred
tax assets after netting the future reversal of temporary differences. Based on
the Argentine's Income Tax Law there are no provisions that allow the Company to
carryback tax losses to prior years. Following the same principle the Group
fully reserved its PMIT carryforward.

B. COMMISSIONS ON LOANS

Under Argentine Banking GAAP, the Bank does not defer certain loan origination
costs relating to credit cards. In accordance with U.S. GAAP under SFAS 91, loan
origination fees net of certain direct loan origination costs should be
recognized over the life of the loan as an adjustment of yield.

C. INTANGIBLE ASSETS

Included in organization and development costs of the Bank are costs for
compensation and severance payments to Bank employees as part of restructurings.
These items are being amortized over 60 months. U.S. GAAP requires that such
costs be expensed as incurred.

The Bank amortizes deferred expenses for setting up branches over the related
lease agreements, a maximum of 60 months. Subsequent to the year ended June 30,
1999, in accordance with SOP 98-5 effective for fiscal years beginning after
December 15, 1998, such start-up costs should be expensed as incurred.

Goodwill recorded on the purchase of credit card companies is being amortized in
10 years for Argentine Banking GAAP purposes. Under U.S. GAAP, a 5 year
amortization period was elected to represent the period benefited by the
intangible asset in accordance with APB 17.

                                      F-84

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

For the purposes of U.S. GAAP, goodwill is reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Such evaluation is based on various analyses including
undiscounted cash flow projections that considers circumstances that occurred
subsequent to December 31, 2001. Under Argentine GAAP, the facts and
circumstances subsequent to December 31, 2001, including the effects of the
devaluation of the peso, are not considered in the assessment of a company's
ability to continue as a going concern. For the reconciliation to U.S. GAAP, the
Group has recorded a loss on its financial statements as of December 31, 2001.

For fiscal years beginning after December 15, 2001, SFAS 142 supersedes APB 17.
This statement establishes that goodwill must no longer be amortized but rather
must be tested for impairment at least annually or whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Such evaluation is based on various analyses including undiscounted
cash flow projections. Amortization expenses of the current year under Argentine
GAAP have been recovered for U.S. GAAP purposes.

Under U.S. GAAP the SOP 98-1, effective for fiscal years beginning after
December 15,1998, define three stages for the costs of computer software
developed or obtained for internal use: the preliminary project stage, the
application development stage and the post-implementation operation stage. Only
the second stage costs should be capitalized. Under Argentine GAAP the Bank
capitalized costs relating to all three of the stages of software development.

The Group, following the guidelines established by the article 202 of the
Argentine Commercial Companies Law, has deducted from the Share Issuance
Premiums the organizational costs related to the exchange offer and the issuance
of shares conducted in July 2000. Under U.S. GAAP and following the guidelines
established by SAB 50, the organizational costs such as legal, printing and
other costs related to the exchange offer and the issuance of shares have been
considered an intangible asset and a 5 year amortization period was elected to
represent the period benefited by the intangible asset. The audit fees related
to this these transactions have been expensed as incurred, in accordance to U.S.
GAAP.

D. LOAN LOSS RESERVES

The Bank's accounting for its loan loss reserve differs in some respects with
practices of U.S. based banks. The most significant differences follow:

         (I) LOAN CHARGE OFFS AND RECOVERIES

The Bank records recoveries on previously charged-off loans directly to income
and records the amount of charged-off loans in excess of amounts specifically
allocated as a direct charge to the income statement. The Bank does not
partially charge off troubled loans until final disposition of the loan, rather,
the allowance is maintained on a loan-by-loan basis for its estimated settlement
value. The banking industry practice in the United States is to account for all
charge off and recovery activity through the allowance for loan loss account.
Further, loans are generally charged to the allowance account when all or part
of the loan is considered uncollectible. In connection with loans in judicial
proceedings, resolution through the judicial system may span several years.
Loans in judicial proceedings, greater than three years at December 31, 2002,
2001 and 2000, June 30, 2000, amounted to Ps.323,104, Ps.335,431, Ps.245,625 and
Ps.248,648, respectively. Had these loans been charged off, the balance of loans
and the allowance for loan losses would decrease by this amount. The Bank's
practice does not affect the accompanying statements of income as the Bank's
reserve contemplates all losses inherent in those troubled loans.

                                      F-85

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
         December 31, 2000 and for the fiscal year ended June 30, 2000
  (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as notes)

         (II) LOANS - NON-FINANCIAL PUBLIC SECTOR

During the fiscal year ended December 31, 2001, and as a consequence of Decree
No.1387/01, effective as of November 6, 2001, the Bank swapped part of its
Argentine public-sector debt instruments, under the Promissory Note/Bond
program, for Secured Loans.

As established by article 20 of the above mentioned decree, the conversion was
made at the nominal value, at a rate of exchange of Ps.1=US$1 and in the same
currency as that of the converted obligation.

The Argentine Central Bank provided that the difference between the nominal
value of the Secured Loans and the book value of the public-sector debt
instruments exchanged (in the case of securities, classified and valued as
"investment accounts" or "for trading purposes", under Argentine Central Bank
rules) must be credited to income and added to the recorded amount included in
"Loans - To the non-financial public sector" on a monthly basis, in proportion
to the term of each of the secured loans received.

In accordance with U.S. GAAP, satisfaction of one monetary asset (in this case a
loan or debt security) by the receipt of another monetary asset (in the case a
Secured Loan) for the creditor is generally based on the market value of the
asset received in satisfaction of the debt. In this particular case, the Secured
Loan being received is significantly different in structure and in interest
rates than the debt securities swapped. Therefore, the fair value of the loans
was determined on the balance sheet date based on the contractual cash flows of
the loan received discount at an estimated market value.The estimated fair value
of the loan received will consitute the cost basis of the asset. The difference
between the cost basis and amounts expected to be collected will be amortized on
an effective yield basis over the life on the loan.

As part of the implementation of the Galicia Capitalization and Liquidity Plan
during the fiscal year ended December 31, 2002, a "Secured Loans" Trust has been
created where Ps.108,000 of secured loans were by in exchange for portion in
cash and certificates of participation in a sale transaction.

In addition, the Group has offered to exchange certain loans to Argentine
provincial governments for loans of the Argentine Federal Government, however
that exchange has not been finalized. The Group has other loans to provincial
governments that, in addition to the aforementioned provincial loans, are
considered to be impaired under U.S. GAAP in accordance wih Statement of
Financial Accounting Standards No. 114. Accordingly, the Group has established
an allowance for loan losses on loans to Argentine Provinces.

                                      F-86

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

         (iii) IMPAIRED LOANS - NON-FINANCIAL PRIVATE SECTOR AND RESIDENTS
         ABROAD

For the purposes of reporting under U.S. GAAP, the Bank adopts Statement of
Accounting Standards No. 114, "Accounting for Creditors for Impairment of a
Loan" ("SFAS 114") as amended by Statement of Financial Accounting Standards No.
118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures" ("SFAS 118"). SFAS 114, as amended, requires that the carrying
value of an impaired loan be based on the present value of expected future cash
flows discounted at the loan's effective interest rate or the fair value of the
collateral, if the loan is collateral dependent. Under SFAS 114, a loan is
considered impaired when, based on current information, it is probable that the
borrower will be unable to pay contractual interest or principal payments as
scheduled in the loan agreement. SFAS 114 applies to all loans except
smaller-balance homogeneous consumer loans, loans carried at fair value or the
lower of cost or fair value, debt securities, and leases.

The Bank applies SFAS 114 to all commercial loans classified as " With
problems", "Insolvency Risks" and "Uncollectible" or commercial loans greater
than 90 days past due. In addition, as of December 31, 2001 the Bank has
included in the scope of SFAS 114, other loans with potential risk besides the
above-mentioned for Ps.1,949,899.The Bank specifically calculates the present
value of estimated cash flows for commercial loans in excess of Ps.200,000 and
greater than 90 days past due. For commercial and other loans in legal
proceedings, loans in excess of Ps.200,000 are specifically reviewed either on a
cash-flow or collateral-value basis, both considering the estimated time to
settle the proceeding. As of December 31, 2002, for commercial loans under the
thresholds described above, the Bank believes the percentages applied under the
Central Bank rules result in an allowance on such loans that approximates the
amounts under SFAS 114.

The following information relates to the Bank's impaired loans:

<TABLE>
<CAPTION>
                                                                              GRUPO GALICIA                      BANCO GALICIA
                                                              -------------------------------------------------  ---------------
                                                                      DECEMBER 31,              DECEMBER 31,        JUNE 30,
                                                              ------------------------------  -----------------  ---------------
                                                                   2002           2001                2000              2000
                                                              ------------------------------  -----------------  ---------------
<S>                                                           <C>                 <C>         <C>                <C>
Total impaired loans.....................................     Ps.   2,211,814     2,915,717   Ps.      502,797   Ps.    475,253

Average impaired loans during the year...................           2,965,832     2,590,117            499,199          465,631

Impaired loans where no additional loan loss
allowance has been provided in accordance with FAS 114...           1,564,775       474,967            291,863          258,932

Cash payments received for interest on impaired loans,
Recognized as income.....................................               1,646         3,183              2,671            3,598

Allowance for impaired loans under SFAS 114..............           1,022,577     1,271,686            215,698          204,287
</TABLE>

In addition the Bank has performed a migration analysis for consumer loans and
all performing commercial loans, as detailed in, "Loan loss reserves under U.S.
GAAP", in the selected statistical information. The result of the migration
analysis, shows that the Bank has provided for loan losses in excess of this
analysis for Ps. 112,000. For U.S. GAAP purposes, this amount of provision has
been reversed.

         (iv) CREDIT CARDS

The Group establishes its reserve for credit card loans based on the past due
status of the loan. All loans greater than 180 days has been reserved at 50% in
accordance with the rules established by the Central Bank. Under U.S. GAAP,
loans greater than 180 days past due should charged off. As a result charge offs
the credit card portfolio under U.S. GAAP would be increased as of December 31,
2002 and 2001, Ps.31,652

                                      F-87

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

and Ps.70,994, respectively. The Group also increased its reserve for credit
card loans by a like amount to cover additional loss exposure inherent in the
credit card portfolio.

e. GOVERNMENT SECURITIES AND OTHER INVESTMENTS

         (i) INVESTMENT SECURITIES

The Bank's government securities and certain other securities that are included
under the caption "investment accounts" under Argentine Central Bank rules, are
considered as "available for sale" under U.S. GAAP. As of December 31, 2001, the
Bank did not hold government securities classified as investment securities
under Argentine Central Bank rules.

The gross gain on sales of government securities considered as "available for
sale" under U.S. GAAP amounted to Ps.2,073, Ps.880 and Ps.19,527 for the fiscal
year ended December 31, 2001, for the six-month period ended December 31, 2000
and for the year ended June 30, 2000, respectively; and the gross losses on
sales from government securities classified as "available for sale" under U.S.
GAAP amounted to Ps.(15), Ps.(2) and Ps.(352) for the fiscal year ended December
31, 2002 and 2001, for the six-month period ended December 31, 2000 and for the
year ended June 30, 2000, respectively.

As of December 31, 2002 there were no sales of government securities considered
as "available for sale" under U.S. GAAP.

Argentine Banking GAAP provides that only coupon interest, rather than the
discounts or premiums on purchase, can be accrued on available for sale
securities as of March 1, 2000. Therefore from March 1, 2000, the cost of the
investment includes the purchase price plus the amount of the accrued coupon
interest. For the purposes of U.S. GAAP the Bank continued accreting and
amortizing discounts and premiums as a component of its interest income. For
U.S. GAAP the cost of the investments continued to be calculated in accordance
with the amortized cost basis.

         (ii) HEDGE BONDS ISSUED IN CONNECTION WITH THE COMPENSATION FOR FOREIGN
         CURRENCY POSITION AND COMPENSATORY BONDS ISSUED IN CONNECTION WITH THE
         COMPENSATION FOR "ASSYMETRIC PESOFICIATION"

For the "asymmetric pesification" and its consequences

Argentine Central Bank's Communication "A" 3650 established the regulations
necessary to implement the provisions of Decree No.905/02 in connection with the
compensation of the negative effects of the conversion into pesos at different
exchange rates of financial institutions' assets and liabilities and the
resulting foreign currency mismatches left in their balance sheets. The Bank
informed the Central Bank in three communications each following the applicable
Communication issued by the Central Bank of the amount of bonds they believed
they were entitled to under communications issued by the Central Bank (the last
correspondence being January 2003). The amount of compensation so determined
amounted to US$1,021.8 million (Compensatory Bond) and US$1,232.2 million (Hedge
Bond). The Central Bank deposited in October 2002 Compensatory Bonds in the
amount of US$ 200.8 million to the account of the Bank. The subscribed amount of
the Hedge Bond are included as "Other Receivables Resulting from Financia
Brokerage - Other". In order to purchase the subscribed Hedge Bonds, the Bank
may enter into a credit agreement with the Central Bank, with interest payable
at CER plus 2%. In the case of the Hedge bonds and the related financing to be
obtained from the Central Bank, the transaction is retroactive to February 3,
2002. The Bank can withdrawal its request to purchase the Hedge Bonds prior to
the approval of the Central Bank and prior to the transaction is executed.

                                      F-88

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

In connection with the Bank's right (but not the obligation) to purchase the
Hedge Bonds, the Bank has recognized the right to purchase the Hedge Bonds at
their equivalent value as if the Bank had the associated bonds in their
possession, and recognized the associated liability to fund the Hedge Bonds as
if the Bank had executed the debt agreement with the Central Bank. The
receivable is denominated in U.S. dollars bearing interest at 2% whereas the
liability to the Central Bank is denominated in pesos with interest being
accrued at CER plus 2%, each retroactive to February 3, 2002.

Under U.S. GAAP the right to purchase the Hedge Bonds is not considered an asset
under Financial Accounting Standards Board Statement of Concepts No. 6 Elements
of Financial Statements (CON 6). Under CON 6, assets are defined as "...probable
future economic benefits obtained or controlled by an entity as a result of past
transactions or events". In addition, one of the three essential characteristics
of an asset include that an entity can obtain the benefit and control others'
access to it. As of December 31, 2002, the Bank can not obtain the benefit of
the Hedge Bonds to be purchased until such time as the transaction becomes
approved by the Central Bank and the Bank remits funds to the Central Bank. The
liability under U.S. GAAP would be recognized when the Bank enters into the
financing arrangement.

In connection with the Compensatory Bonds received or receivable by the Bank,
such amounts should initially be recognized at their market value (limited to
the amounts of the loss suffered by the Bank in connection with the" asymmetric
pesification"). Compensation Bonds in the Bank's possession are classified as
available for sale and recognized at market with the gain or loss recognized as
a charge or credit to equity through other comprehensive income. In connection
with estimating the fair value of the Compensatory Bonds, the Bank used quoted
market values. There has been limited activity in the trading of these
securities and as such, the quoted market values may not represent the price of
an actual sale between a willing buyer and a willing seller. Absent additional
information the Bank has used the market quotation as the fair market value for
estimating U.S. GAAP adjustments.

For the "asymmetric indexation" and legal actions related to the payment of
deposits

In addition, financial institutions have requested to the government that they
be compensated for the losses generated to them by: 1) the payment of deposits
pursuant to judicial orders at the free market exchange rate, which was greater
than that established by the government for conversion into pesos of included
financial institutions' assets and liabilities, and 2) the adjustment for
inflation of included assets and liabilities by using different coefficients
(CER vs. CVS) ("asymmetric indexation"). As of the date of preparation of these
financial statements, the authorities have not taken any measures to compensate
these issues.

Under Argentine Central Bank rules, the difference describe in (1) above
adjusted by applying the CER and interest accrued at the payment date, has been
recorded in "Other receivables resulting from financial brokerage". As of
December 31, 2002, that difference amounted to Ps.442,895.

Under U.S. GAAP the right to obtain this compensation is not considered an asset
under Financial Accounting Standards Board Statement of Concepts No. 6 Elements
of Financial Statements (CON 6). Under CON 6, assets are defined as "...probable
future economic benefits obtained or controlled by an entity as a result of past
transactions or events". In addition, one of the three essential characteristics
of an asset include that an entity can obtain the benefit and control others'
access to it. As of December 31, 2002, the Bank can not obtain the benefit of
the compensation until such time as the compensation becomes approved by the
National Government and the Argentine Central Bank.

         (iii) STRUCTURED NOTES

During the year ended June 30, 1999 the Bank transferred investments from its
available-for-sale portfolio in exchange for a structured note. The cash flows
receivable on the structured note are linked to the cash flows on the underlying
security.

                                      F-89

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

The Bank accounted for this transaction by eliminating the unrealized losses,
then included in equity, and recording the structured note at its face value.

Under U.S. GAAP the above transfer would not qualify as a sale under SFAS 125
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" because the Bank retains a 100% beneficial interest in the
transferred assets. Changes in the market value of the securities transferred
will continue to be recognized under SFAS 115.

During November 2001, this structured note was dissolved as the underlying bonds
were part of the swap transaction described in 38.d(ii).

f. ITEMS IN PROCESS OF COLLECTION

The Bank does not give accounting recognition to checks drawn on the Bank or
other banks, or other items to be collected until such time as the related item
clears or is accepted. Such items are recorded by the Bank in memorandum
accounts. U.S. banks, however, account for such items through balance sheet
clearing accounts at the time the items are presented to the Bank.

The Group's assets and liabilities would be increased by approximately
Ps.476,619 and Ps.2,547,464 had U.S. GAAP been applied at December 31, 2002 and
2001, respectively.

g. DERIVATIVE INSTRUMENTS

The Bank accounts for derivaties in memoranda accounts off balance sheet.

Under U.S. GAAP SFAS 133 as amended by SFAS 137 and SFAS 138 was applicable for
all fiscal quarters of all fiscal years beginning after June 15, 2000.

SFAS No. 133 establishes the standards of accounting and reporting derivative
instruments, including certain derivative instruments in other contracts
(collectively referred to as derivatives) and hedging activities. This Statement
requires institutions to recognize all derivatives in the balance sheet, whether
as assets or liabilities, and to measure those instruments at their fair value.
If certain conditions are met, a derivative may be specifically designated as
(a) a hedge for the exposure to changes in the fair value of a recorded asset or
liability or unrecorded firm commitment, (b) a hedge for the exposure. If such a
hedge designation is achieved then special hedge accounting can be applied for
the hedged transactions, that will reduce the volatility in the income statement
to the extent that the hedge is effective. In order for hedge accounting to be
applied the derivative and the hedged item must meet strict designation and
effectiveness tests.

As of December 31, 2001 the Group had not designated any of its derivatives as
fair value, cash flow or foreign currency hedges in accordance with the
provisions of SFAS 133. Therefore, under the provisions of SFAS 133, the
derivatives would be accounted for at fair value in the balance sheet and the
unrealized gains and losses on those derivatives would be accounted for in the
income statement.

As of December 31, 2002, the book value of the option contracts, is believed by
management to approximate fair value.

                                      F-90

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

h. FORWARD CONTRACTS IN FOREIGN CURRENCY

Apart from the valuation differences for derivative financial instruments that
have been discussed above the Bank accounts for forward foreign currency
contracts by recognizing a receivable and a payable for the currencies for which
it will make a gross settlement.

Under SFAS 52 and SFAS 80, applicable for the Group until June 30, 2000, and
under SFAS 133, applicable for the Group from July 1, 2000 until December 31,
2000, forward contracts are recorded on a net rather than under a gross basis.

In addition to the adjustment recorded for the purposes of SFAS 133, the Bank's
assets and liabilities would be decreased by approximately Ps.669 and Ps.372,776
had U.S. GAAP been applied as of December 31, 2002 and 2001, respectively.

i. REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

The Bank enters into repurchase and reverse repurchase agreements of financial
instruments on a basis different from that required under U.S. GAAP. At the
initial transaction date, the Bank records the government securities purchase or
sale and records the amount of cash and security to be exchanged in the future
as a receivable or payable.

Under U.S. GAAP, for repurchase and reverse repurchase transactions entered into
on or prior to January 1, 1998, only the receipt or payment of cash and the
related payable or receivable for the borrowing or lending of cash was recorded.

For repurchase and reverse repurchase transactions entered into on or after
January 1, 1998 to July 30, 2000 debtors under repurchase agreements reclassify
financial assets pledged as collateral in certain circumstances in which the
secured party has taken control of these assets. As of December 31, 2001 and
2000, debtors under repurchase agreements must reclassify financial assets
pledged as collateral irrespective of whether the secured party has taken
control of the assets. For repurchase and reverse repurchase transactions
entered into on or after January 1, 1998, secured parties must recognize assets
received as collateral on the balance sheet only in the case of sale of the
collateral or default of the borrower.

The Bank's assets and liabilities would be decreased by approximately
Ps.2,960,905 and Ps.2,355,364 had U.S. GAAP been applied as of December 31,
2000, and June 30, 2001, respectively. As of December 31, 2002 and 2001 there
were no reverse repurchase agreements.

j. TRANSFERS OF FINANCIAL ASSETS

Financial trust "Galtrust I"

The financial trust "Galtrust I" was created in October 2000 in connection with
the securitization of provincial loans for a total amount of Ps.1,092 million.
The securitized loans were from the portfolio of loans granted to provincial
governments, guaranteed by the federal tax revenues shared with the provincial
governments. This trust was recorded under Argentine Central Bank rules in the
"Other Receivables from Financial Brokerage", account in the financial
statements and its balance as of December 31, 2002, 2001 and 2000, was Ps. 680
million, Ps.647 million and Ps.979 million, respectively. The Bank considers
this transaction as a sale under U.S. GAAP, following the rules established by
FAS 125, Galtrust I debt securities and certificates retained by the Bank are
considered as "available for sale" under U.S. GAAP and the unrealized gains
(losses) on these securities are reported as an adjustment to shareholders'
equity, unless unrealized losses are deemed to be other than temporary in
accordance with Emerging Issues Task Force No. 99-20. The unrealized loss on the

                                      F-91

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

retained interests at December 31, 2001 has been deemed to be other than
temporary and such loss has been charged to income. The retained interests were
initially recorded based on their allocated book value using the fair value
allocation method.

During 2002, the portfolio of loans included in and the related retained
interest in Galtrust I were subject to the pesification described in Note 1. As
a result the retained interest in the trust was converted to pesos at an
exchange rate of to 1.40 to 1 and the interest rate for their debt securities
changed to CER plus 2%. Also Galtrust I will be swaped for National Government
Loans.

For purposes of estimating the fair value of the retained interests in the
securitization trusts valuation models were used which consider certain
assumptions in estimating future cash flows and a rate under which the cash
flows are discounted.

These significant assumptions include:

    -    Cumulative prepayment rate estimated based on the prepayment history of
         similar loans. This rate was equivalent to 1.52% as of October 2000,
         December 31, 2000, December 31, 2001 and December 2002.

    -    As of December 31, 2000 and 2001, there had been no experience of
         losses on these loans. The credit risk reflected by the subordination
         of the B and C note was taken into account in the discount rate applied
         by the Bank. The discount rates used as of October 2000, December 2001
         and 2002 were as follows.

DISCOUNT RATE FOR: (a)

<TABLE>
<CAPTION>
                                                  DECEMBER 31,        DECEMBER 31,   DECEMBER 31,        OCTOBER
                                                 ---------------------------------------------------------------
                                                      2002                2001          2000              2000
                                                 ---------------------------------------------------------------
<S>                                              <C>                  <C>            <C>                 <C>
Galtrust I Class A Debt Securities                    -                     -            8.5%              9.5%
Galtrust I Class B Debt Securities                   22%(b)              39.2 %         12.0%             12.6%
Galtrust I Participation Certificates                22%(b)              39.2 %         13.0%             13.0%
</TABLE>

(a)  As of October 2000, December 31, 2000 and 2001, the rate is based upon the
     Bank's estimate of comparable rates of discount used in similar rated bonds
     in Argentina.

(b)  As of December 31, 2002, the discount real rate used is based on CER plus
     700 basis points (no similar bonds existed at December 31, 2002).

Financial trust "Galtrust II, III, IV, V" and "Galicia Mortgage Loans"

As described in Note 34 of the Group's financial statements on December 17, 2001
and April 2002, the Bank entered into securitization transactions where the Bank
established five different trusts and transferred to the trusts ownership of
mortgage loans in exchange for debt securities and residual interests in the
trusts.

These transfers would not be considered as a sale for U.S. GAAP purposes.
However, in accordance with Financial Accounting Standards Board Statement No.
140, at the completion of a transfer of financial assets, the transferor should
carry in its balance sheet any retained interests in the transferred assets. The
cost basis of the assets transferred would be allocated to the retained
interests based on their relative fair values at the date of transfer.
Subsequently, those retained interests would be accounted for as available for
sale

                                      F-92

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

securities. For Argentine GAAP purposes, these retained interests are
accounted for at cost plus accrued interest for the debt securities, and the
equity method is used to account for the residual interest in the trusts.

As described in note 34, on December 26, 2002 the "Galtrust III and IV"
financial trusts were terminated, and the loan portfolio of those trusts have
been incorporated to the Bank's loan portfolio. The Bank has performed a
migration analysis for these consumer loans, which shows that the book value is
a reasonable estimate of it's fair value.

For "Galtrust II and V", the book value of the debt securities and residual
interests the Bank has, is believed by management to approximate fair value.

For "Galicia Mortgage Loans", the book value of the residual interests
approximates its fair value.

k. ACCEPTANCES

Under Argentine GAAP, acceptances are accounted for in memorandum accounts.
Under U.S. GAAP, third party liability for acceptances should be included in
"Other receivables resulting from financial brokerage" representing Bank
customers' liabilities on outstanding drafts or bills of exchange that have been
accepted by the Bank. Acceptances should be included in "Other liabilities
resulting from financial brokerage" representing the Bank's liability to remit
payment upon the presentation of the accepted drafts or bills of exchange.

The Bank's assets and liabilities would be increased by approximately
Ps.104,846, Ps.153,331, Ps.138,398 and Ps.137,710, had U.S. GAAP been applied as
of December 31, 2002, 2001 and 2000, and June 30, 2000, respectively.

l. YEAR 2000 COSTS

Under Argentine GAAP costs related to the Year 2000 project have been
capitalized. Under U.S. GAAP costs relating to the Year 2000 project arising
from the modification of existing systems must be expensed as incurred.

m. FOREIGN EXCHANGE DIFFERENCE

At December 31, 2001, the official exchange rate between the U.S. dollar and the
Argentine peso was 1 to 1 and for Argentine GAAP purposes, this rate was used to
translate all U.S. dollar denominated assets and liabilities at December 31,
2001.

For U.S. GAAP purposes, foreign currency transactions should be translated at
the applicable rate at which those particular transactions could be settled at
the balance sheet date. In anticipation of an announced devaluation, "exchange
houses" in Argentina (used for limited personal transactions and not for
settling business transactions) started exchanging dollars at 1.4 or more pesos
to the dollar prior to December 31, 2001. Such exchange houses were closed at
December 31, 2001. Through January 10, 2002, no transactions were conducted in
U.S. dollars and there was no exchangeability between the peso and the dollar.
Under Statement of Accounting Standards No. 52, if the exchangeability between
two currencies is temporarily lacking at the balance sheet date, the first
subsequent rate at which exchanges could be made is used for translating foreign
currency transactions. In this case, the January 11, 2002, exchange rate of
Ps.1.6 to US$1 was the first available rate after year end and thus that rate
was used for U.S. GAAP purposes to translate U.S. dollar denominated assets and
liabilities at December 31, 2001.

                                      F-93

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

In addition, the Group's equity holdings in Argentine companies were similarly
adjusted for its proportional effect of applying the Ps.1.6 to US$1 exchange
rate to the U.S. dollars denominated assets and liabiliites of such companies at
December 31, 2001.

As of December 31, 2002 and under Argentine GAAP purposes, foreign currency
assets and liabilities are stated in pesos, using the U.S. dollar rate of
exchange set by the Argentine Central Bank, prevailing at the close of
operations on the last business day of each month

h. IMPAIRMENT OF FIXED ASSETS AND FORECLOSED ASSETS

Under Argentine Banking GAAP, fixed assets and foreclosed assets are restated
for inflation using the WPI index at December 31, 2002. As such, the balances of
fixed assets and foreclosed assets were increased by approximately 118%. In
accordance with Statement of Accounting Standards No. 144, "Impairment of
Long-lived Assets", such assets are subject to impairment tests in certain
circumstances. Because projected cash flows associated with fixed assets and
foreclosed assets are insufficient to recover the restated carrying amounts of
the assets, those assets should be tested for impairment. Market values for the
Bank's fixed and foreclosed assets were obtained. The difference between the
market values and the amount recorded under Argentine Banking GAAP, was charged
to income for the year ended December 31, 2002.

                                      F-94

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

CONSOLIDATED NET INCOME

<TABLE>
<CAPTION>
                                                                           GRUPO GALICIA                            BANCO GALICIA
                                                                  -------------------------------   --------------  -------------
                                                                                                     SIX-MONTHS
                                                                                                        ENDED        YEAR ENDED
                                                                  FISCAL YEARS ENDED DECEMBER 31,    DECEMBER 31,      JUNE 30,
                                                                  -------------------------------   --------------  -------------
                                                                       2002             2001             2000           2000
                                                                  --------------   --------------   --------------  -------------
<S>                                                               <C>              <C>              <C>             <C>
Net income as stated.........................................     Ps. (1,458,793)         262,254          196,401  Ps.   341,477
Loan origination fees and costs:
   Credit card costs (Note 39b.).............................            (11,160)           3,628             (142)           363
Intangible assets(Note 39c.):
   Capitalized costs for compensations to Bank's employees...                  -              299              478          4,821
   Amortization of deferred expenses for setting up of
   branches..................................................             31,473           11,425            5,592         (5,035)
   Goodwill amortization.....................................             33,813          (17,954)          (8,216)       (10,289)
   Goodwill impairment.......................................             66,860          (97,700)               -              -
Year 2000 costs (Note 39l.)..................................              2,980            2,980            1,490        (15,295)
Software costs (Note 39c.)...................................              6,651           (1,560)          (3,657)        (3,840)
Loss on exchange of Public Debt (Note 39d(ii))...............          2,023,056       (3,330,379)               -              -
Loan impairment - Public Debt (Note 39d(ii)).................            978,057       (2,224,181)               -              -
Loan impairment - private sector (Note 39d(iii)).............            965,250         (864,318)          11,246         35,226
Loan impairment - credit cards (Note 39d (iv)) ..............             39,342          (70,994)               -              -
Derivative instruments (Note 39g)............................               (937)         (17,167)          18,104              -
Amortization of organization costs on exchange offer
(Note 39c )..................................................             (4,646)          (4,646)          (6,007)             -
Impairment / loss on Galtrust I securities (Note 39j)                    301,356         (555,020)            (769)             -
Government Securities:
  Compensatory Bond received (Note 39e (ii)).................           (378,417)               -                -              -
  Compensatory Bond to be received (Note 39e (ii))...........         (1,573,762)               -                -              -
  Hedge Bond (Note 39e (ii)).................................         (1,754,651)               -                -              -
  Compensation related to the payment of deposits (Note
  39e (ii)) .................................................           (442,895)               -                -              -
  Accrued interest of other available-for-sale
Securities (Note 39e (i))....................................                  -                -          (11,338)        (6,505)
Foreign exchange difference (Note 39m).......................          1,694,640       (1,694,640)               -              -
Foreign exchange difference in Equity investments in
other companies (Note 39m). .................................             66,889          (66,889)               -              -
Impairment of fixed assets and foreclosed assets (Note
39h).........................................................            (66,574)               -                -              -
Reversal of deferred taxes under Argentine GAAP (Note 39a)...                  -          (44,481)             100        (31,336)
Deferred taxes, net (Note 39a)...............................                  -           (8,971)          12,747         48,750
Presumptive minimum income tax...............................            (11,702)               -                -              -
Minority interest ...........................................            (87,990)         154,620           (1,298)             -
                                                                  --------------   --------------   --------------  -------------
Net income (loss) in accordance with U.S. GAAP...............     Ps.    418,840       (8,563,694)  Ps.    214,731  Ps.   358,337
                                                                  ==============   ==============   ==============  =============
Net income (loss) per share in accordance with U.S. GAAP
(Note 24)....................................................     Ps.      0.383           (7,839)  Ps.      0.210  Ps.     0.306
                                                                  ==============   ==============   ==============  =============
Average number of shares outstanding (in thousands)
(Note 24)....................................................          1,092,407        1,092,407        1,023,673      1,171,705
                                                                  --------------   --------------   --------------  -------------

Net income (loss) per share in accordance with U.S. GAAP
assuming full dilution (Note 24).............................     Ps.      0.383           (7,839)  Ps.      0.210  Ps.     0.306
                                                                  ==============   ==============   ==============  =============
</TABLE>

                                      F-95

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

CONSOLIDATED SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                              GRUPO GALICIA                   BANCO GALICIA
                                                            ------------------------------------------------  -------------
                                                                                                               YEAR ENDED
                                                                               DECEMBER 31,                      JUNE 30,
                                                            ------------------------------------------------  -------------
                                                                 2002             2001            2000            2000
                                                            ---------------  --------------   --------------  -------------
<S>                                                         <C>              <C>              <C>             <C>
Shareholders' equity as stated..........................    Ps.  1,624,475        3,076,747   Ps.  2,885,246  Ps  2,909,973
Loan origination fees and costs (Note 39b.).............             1,785           12,945            9,317          9,459
Intangible assets (Note 39c.):
  Capitalized costs for compensations to the Bank's
  employees.............................................                 -                -             (299)          (778)
  Amortization of deferred expenses for setting up of
  branches..............................................           (22,218)         (53,691)         (65,115)       (70,707)
  Goodwill amortization.................................            (9,067)         (42,880)         (24,926)       (16,711)
  Goodwill impairment...................................           (30,840)         (97,700)               -              -
  Software costs........................................            (2,406)          (9,057)          (7,497)        (3,840)
Loss on exchange of Public Debt(Note 39d(ii))...........        (1,307,323)      (3,330,379)               -              -
Loan impairment - Public Debt (Note 39d(ii))............        (1,246,124)      (2,224,181)               -              -
Loan impairment - private sector (Note 39d(iii))........            79,031         (886,219)         (21,901)       (33,146)
Loan impairment - credit card (Note 39d(iv))............           (31,652)         (70,994)               -              -
Government securities:                                                                    -                -              -
  Compensatory Bond received (Note 39e (ii))............          (398,546)               -                -              -
  Compensatory Bond to be received (Note 39e (ii))......        (1,573,762)               -                -              -
  Hedge Bond (Note 39e (ii))............................        (1,754,651)               -                -              -
  Compensation related to the payment of deposits
 (Note 39e (ii)) .......................................          (442,895)               -                -              -
  Unrealized appreciation (depreciation) of other
available-for-sale securities (Note 39e(j)..............            (1,119)               -         (127,092)      (126,804)
Structured notes (Note 39e (iii)) ......................                 -                -         (125,488)      (131,363)
Derivative instruments (Note 39g).......................                 -              937           18,104              -
Tax effect unrealized appreciation (depreciation) of
available-for-sale securities (Note 39e (i))............                 -                -           44,481         44,381
Tax effect structured notes (Note 39e (ii)..............                 -                -           43,920         45,975
Amortization of organization costs related to the
exchange offer (Note 39c) ..............................           (15,299)         (10,653)          (6,007)             -
Organization costs related to the exchange offer (Note
39c)....................................................            24,590           24,590           24,590              -
Tax effect organization costs related to the exchange
offer (Note 39c)........................................                 -                -           (8,607)             -
Loss on sale of Galtrust I debt securities (Note 39j)...                 -                -             (769)             -
Unrealized appreciation (depreciation) of Galtrust I
securities (Note 39j)...................................          (247,605)        (555,789)         (33,223)             -
Tax effect Galtrust I securities (Note 39j).............                 -                -           11,628              -
Unrealized appreciation (depreciation) of Galtrust II,
III, IV, V securities (Note 39j)........................                 -          (57,037)               -              -
Minority interest.......................................            83,081          171,071           16,451              -
Year 2000 costs (Note 39l)..............................           (20,118)         (23,098)         (26,078)       (27,567)
Foreign exchange difference (Note 39m)..................                 -       (1,694,640)               -              -
Equity investments in other companies (Note 39m) .......                 -          (66,889)               -              -
Impairment of fixed assets and foreclosed assets (Note
39h)....................................................           (66,574)
Presumptive minimum income tax (Note 39a) ..............           (11,702)               -                -              -
Prior income tax adjustments (Note 39a).................            (6,521)               -                -              -
Investment securities deferred tax provision (Note 39e
(i))....................................................                 -                -           44,481         44,381
Deferred taxes, net (Note 39a)..........................                 -                -           17,578          4,832
                                                            ---------------  --------------   --------------  -------------
Consolidated shareholders' equity (deficit) in
accordance with U.S GAAP................................    Ps  (5,375,460)      (5,836,917)  Ps   2,668,794  Ps  2,648,085
                                                            ===============  ==============   ==============  =============
</TABLE>

                                      F-96

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
 (Expressed in thousands of constant Argentine pesos as of December 31, 2002,
                                except as noted)

Roll forward analysis of shareholder's equity under U.S. GAAP at December 31,
2002, 2001 and 2000, and June 30, 2000:

<TABLE>
<CAPTION>
                                           BANCO GALICIA
 -------------------------------------------------------------------------------------------------
                                                                                PROFIT RESERVES
                                                                            -----------------------
                                                            ADJUSTMENTS
                                                                 TO
                                    CAPITAL      PAID       SHAREHOLDERS'
                                     STOCK     IN CAPITAL      EQUITY           LEGAL       OTHER
                                  -----------  -----------  -------------   -----------  ----------
<S>                               <C>          <C>          <C>             <C>          <C>
 Balance as of June 30,
 1999........................     Ps. 405,417  Ps. 310,678  Ps. 1,000,407   Ps. 296,223  Ps. (8,242)
 Distribution of retained
 earnings:
 Legal reserve...............               -            -              -        65,793           -
 Reserve provided by the
 By-Laws.....................               -            -              -             -          15
 Cash dividends..............               -            -              -             -           -
 Stock distributions to
 shareholders (63,245,024
 shares).....................          63,245            -         74,909             -           -
 Unrealized depreciation of
 available-for-sale
 securities, net of
 tax.........................               -            -              -             -           -
 Net income for the year
 under U.S. GAAP.............               -            -              -             -           -
                                  -----------  -----------  -------------   -----------  ----------
 Balance at June 30, 2000....         468,662  Ps. 310,678  Ps. 1,075,316   Ps. 362,016  Ps. (8,227)
                                  ===========  ===========  =============   ===========  ==========

<CAPTION>
                                      BANCO GALICIA
 ------------------------------------------------------------------------
                                   OTHER                        TOTAL
                               COMPREHENSIVE     RETAINED    SHAREHOLDERS'
                               INCOME (LOSS)     EARNINGS       EQUITY
                              ---------------  -----------  -------------
<S>                           <C>              <C>          <C>
 Balance as of June 30,
 1999........................ Ps.    (292,638) Ps. 514,365  Ps. 2,226,210
 Distribution of retained
 earnings:
 Legal reserve...............               -      (65,793)             -
 Reserve provided by the
 By-Laws.....................               -          (15)             -
 Cash dividends..............               -      (76,166)       (76,166)
 Stock distributions to
 shareholders (63,245,024
 shares).....................               -     (138,154)             -
 Unrealized depreciation of
 available-for-sale
 securities, net of
 tax.........................         139,704            -        139,704
 Net income for the year
 under U.S. GAAP.............               -      358,337        358,337
                              ---------------  -----------  -------------
 Balance at June 30, 2000.... Ps.    (152,934) Ps. 592,574  Ps. 2,648,085
                              ===============  ===========  =============
</TABLE>

<TABLE>
<CAPTION>
                                           GRUPO GALICIA
 --------------------------------------------------------------------------------------------------
                                                                               PROFIT RESERVES
                                                                           ------------------------
                                                             ADJUSTMENTS
                                                                  TO
                                    CAPITAL       PAID       SHAREHOLDERS'
                                     STOCK     IN CAPITAL      EQUITY          LEGAL       OTHER
                                 ------------  -----------  -------------  -----------  -----------
<S>                              <C>           <C>          <C>            <C>          <C>
 Balance at June 30, 2000.....   Ps.  543,000  Ps.  15,250  Ps.   661,202  Ps.   1,944    Ps.40,279
 Capital increase approved
 by extraordinary meeting of
 shareholders held on May
 16, 2000 (*).................        549,407       64,001        726,533            -
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............              -            -              -            -            -
 Organizational costs
 related to the exchange
 offer, net of tax and
 minority interest............              -        7,317          8,666            -            -
 Net income for the period
 under U.S. GAAP..............              -            -              -            -            -
                                 ------------  -----------  -------------  -----------  -----------
 Balance at December 31,
 2000.........................   Ps.1,092,407  Ps.  86,568  Ps. 1,396,401  Ps.   1,944  Ps.  40,279
                                 ============  ===========  =============  ===========  ===========

 Distribution of retained
 earnings:
 Legal reserve................              -            -              -       14,181            -
 Reserve provided by the
 By-Laws......................              -            -              -            -      196,597
 Cash dividends...............              -            -              -            -            -
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............              -            -              -            -            -
 Net loss for the year under
 U.S. GAAP....................              -            -              -            -            -
                                 ------------  -----------  -------------  -----------  -----------
 Balance at December 31,
 2001.........................   Ps.1,092,407  Ps.  86,568  Ps. 1,396,401  Ps.  16,125  Ps. 236,876
                                 ============  ===========  =============  ===========  ===========

 Distribution of retained
 earnings:
 Legal reserve................              -            -              -       13,113            -
 Reserve provided by the
 By-Laws......................              -            -              -            -      251,208
 Cash dividends...............              -            -              -            -            -
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............              -            -              -            -            -
 Net loss for the year under
 U.S. GAAP....................              -            -              -            -            -
                                 ------------  -----------  -------------  -----------  -----------
 Balance at December 31,
 2002.........................   Ps.1,092,407  Ps.  86,568  Ps. 1,396,401  Ps.  29,238  Ps. 488,084
                                 ============  ===========  =============  ===========  ===========

<CAPTION>
                                  GRUPO GALICIA
 -------------------------------------------------------------------------------------
                                        OTHER                                TOTAL
                                    COMPREHENSIVE        RETAINED        SHAREHOLDERS'
                                    INCOME (LOSS)        EARNINGS           EQUITY
                                    ---------------    --------------    -------------
<S>                                <C>                 <C>               <C>
 Balance at June 30, 2000.....     Ps.     (100,631)   Ps.     66,500    Ps  1,227,544
 Capital increase approved
 by extraordinary meeting of
 shareholders held on May
 16, 2000 (*).................              (78,954)          (44,263)       1,216,724
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............               (6,188)                -           (6,188)
 Organizational costs
 related to the exchange
 offer, net of tax and
 minority interest............                                      -           15,983
 Net income for the period
 under U.S. GAAP..............                    -           214,731          214,731
                                   ----------------    --------------    -------------
 Balance at December 31,
 2000.........................     Ps.     (185,773)   Ps.    236,968    Ps. 2,668,794
                                   ================    ==============    =============

 Distribution of retained
 earnings:
 Legal reserve................                    -           (14,181)               -
 Reserve provided by the
 By-Laws......................                    -          (196,597)               -
 Cash dividends...............                    -           (70,753)         (70,753)
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............              128,736                 -          128,736
 Net loss for the year under
 U.S. GAAP....................                    -        (8,563,694)      (8,563,694)
                                   ----------------    --------------    -------------
 Balance at December 31,
 2001.........................     Ps.      (57,037)   Ps. (8,608,257)   Ps.(5,836,917)
                                   ================    ==============    =============

 Distribution of retained
 earnings:
 Legal reserve................                    -           (13,113)               -
 Reserve provided by the
 By-Laws......................                    -          (251,208)               -
 Cash dividends...............                    -                 -                -
 Unrealized appreciation of
 available-for-sale
 securities, net of tax and
 minority interest............               42,617                 -           42,617
 Net loss for the year under
 U.S. GAAP....................                    -           418,840          418,840
                                   ----------------    --------------    -------------
 Balance at December 31,
 2002.........................     Ps.      (14,420)   Ps. (8,453,738)   Ps.(5,375,460)
                                   ================    ==============    =============
</TABLE>

(*) Covered by Board meeting minutes dated July 24, 2000 and July 26, 2000.

                                      F-97

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

COMPREHENSIVE INCOME

SFAS 130 "Reporting Comprehensive Income" establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in the financial statements. Comprehensive income is the total
of net income and all transactions, and other events and circumstances from
nonowner sources.

The following disclosure presented for the fiscal years ended December 31, 2002
and 2001, for the six-month period ended December 31, 2000 and for the year
ended June 30, 2000, shows all periods restated to conform with SFAS 130.

<TABLE>
<CAPTION>
                                                                     GRUPO GALICIA                   BANCO GALICIA
                                                  ------------------------------------------------   -------------
                                                                                      SIX-MONTHS
                                                                                         ENDED        YEAR ENDED
                                                  FISCAL YEARS ENDED DECEMBER 31,    DECEMBER 31,       JUNE 30
                                                  --------------------------------   -------------   -------------
                                                     2002             2001               2000             2000
                                                  --------------------------------   -------------   -------------
<S>                                               <C>             <C>                <C>             <C>
INCOME STATEMENT

Financial Income.............................     Ps  3,948,671    Ps   3,538,627    Ps  1,797,749   Ps  3,268,777
Financial Expenditure........................         4,520,991         2,106,985          967,244       1.695,953
Net Financial Income.........................          (572,320)        1,431,642          830,505       1,572,824
Provision for Loan Losses....................           920,827         4,690,811          258,926         509,713
Income from Services.........................           507,424         1,150,427          513,120         929,331
Expenditures from Services...................           139,424           212,243           95,422         181,272
Monetary result of financial brokerage.......         2,862,286                 -                -               -
Administrative Expenses......................         1,008,431         1,465,307          669,769       1,356,872
Monetary result of operating expenses........            59,809                 -                -               -
Net Income (Loss) from Financial Brokerage...           788,517        (3,786,292)         319,508         454,298
Minority Interests...........................           179,252           132,653          (15,077)            651
Miscellaneous Income.........................           288,888           656,254           89,297         142,483
Miscellaneous Losses.........................          (722,782)       (5,355,180)         (77,439)        (94,368)
Monetary results of other operations.........           (49,188)                -                -               -
Net Income (Loss) before Income tax..........           484,687        (8,352,565)         316,289         503,064
Income Tax....................................          (65,847)         (211,129)        (101,558)       (144,727)
                                                  -------------    --------------
NET INCOME (LOSS) UNDER U.S. GAAP............           418,840        (8,563,694)         214,731         358,337
                                                  -------------    --------------    -------------   -------------
Other comprehensive income gain (loss):

   Unrealized gains (losses) on securities...            42,617           128,736          (15,221)        211,432
   Tax effect on unrealized gains (losses)
   on securities............................                  -                 -            9,033         (71,728)
                                                  -------------    --------------    -------------   -------------
OTHER COMPREHENSIVE INCOME GAIN (LOSS) ......            42,617           128,736           (6,188)        139,704
                                                  -------------    --------------    -------------   -------------
COMPREHENSIVE INCOME (LOSS)...................    Ps    461,457    Ps  (8,434,958)   Ps    208,543   Ps    498,041
                                                  =============    ==============    =============   =============
</TABLE>

                                      F-98

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

CONCENTRATION OF RISK - TOTAL EXPOSURE TO THE PUBLIC SECTOR - ARGENTINE
GOVERNMENT AND PROVINCES

The Group has significant exposure to the Argentine Government and Provinces in
the form of government securities, secured and other debt obligations. As of
December 31, 2002 and 2001, the Group had the following loans outstanding:

<TABLE>
<CAPTION>
                                                                           GRUPO GALICIA
                                                    -------------------------------------------------------------
                                                            DECEMBER 31, 2002              DECEMBER 31, 2001
                                                    ------------------------------  -----------------------------
                                                       ARGENTINE                       ARGENTINE
                                                        BANKING                         BANKING
                                                         GAAP         U.S. GAAP          GAAP         U.S. GAAP
                                                    --------------  --------------  --------------  -------------
<S>                                                 <C>             <C>             <C>             <C>
Argentine Federal Government loans                  Ps   3,979,339  Ps   2,739,513  Ps   5,171,717  Ps  1,817,071

Argentine Provincial loans                               3,777,551       2,531,427       3,193,183      1,300,488

Other Argentine public receivables                         393,955         326,458         921,465        614,248

Galtrust 1 (securitization of Provincial Loans)            680,230         432,625         646,698         90,909

Compensatory bond received                                 687,478         288,932               -              -

Compensatory bond to be received                         2,814,159       1,240,397               -              -

Hedge bond (1)                                           4,222,996               -               -              -

Compensation to be received related to the
payment of deposits                                        442,895               -               -              -

Others (2)                                               1,122,790       1,121,671       1,500,411      1,500,411
                                                    --------------  --------------  --------------  -------------

   Total                                            Ps  18,121,393  Ps   8,681,023  Ps  11,433,474  Ps  5,323,127
                                                    ==============  ==============  ==============  =============
</TABLE>

(1)  The advance to be requested from the Argentine Central Bank for the
     subscription of the Hedge Bond, was recorded in "Other liabilities
     resulting from financial brokerage - Other", for Ps. 2,468,345. Under U.S.
     GAAP, the Hedge Bond and tha advance has been eliminated.

(2)  Includes bonds such as Fiscal Credit Certificate, Argentine Republic
     External Bills and National Government Bonds. The carrying values at
     December 31, 2002 and 2001 are a reasonable estimate of its fair values

As of December 31, 2001 and 2002, the reduction in carrying value for U.S. GAAP
purposes in these loans and securities is primarily a result of the effect of
discounting future cash flows of these loans or securities and because under
U.S. GAAP the right to purchase the Hedge Bonds is not considered an asset.

RISKS AND UNCERTAINTIES

The prospects of the Argentine economy and exchange markets that existed at the
end of 2001 were widely uncertain. The increasing public sector deficit, the
contracting economy and rumors and predictions that Argentina was abandoning the
one-to-one currency parity policy, as well as the impending default on the
country's external obligations, contributed to a great uncertainty as to the
future of Argentina and its economy. Significant measures were put in place in
December 2001, such as the freezing of bank deposits and the introduction of
exchange controls that restricted capital outflows.

Subsequent measures put forth by the Argentine government have added to the
uncertainty, as many government decrees have been issued, then subsequently
changed, modified or repealed. Other decrees lack specific

                                      F-99

<PAGE>

                 GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

and substantive guidance for implementing the new rules. Still others are being
challenged in the Argentine judicial courts.

Due to the Argentine crisis and its material adverse effects on the Bank's cash
flows and deposit base, the Bank became increasingly unable to access to the
financial market or otherwise obtain any financing, other than from the
Argentine Central Bank. The Bank's liquid assets, deposits and cash flows from
operations became insufficient to pay it's foreign obligations as they became
due. As a result, the Bank began to negotiate with its foreign creditors, as
obligations matured, for an extension to the maturities of these obligations
until a comprehensive renegotiation of its entire liabilities with foreign
creditors could be accomplished.

On June 12, 2002, the Bank annunced the restructuring of all of its debts with
foreign creditors, under the framework of the Plan. Within this framework, the
repayment of the Bank's debt with foreign creditors has been postponed until
such debt is renegotiated.

Because the Bank has failed to make certain scheduled debt payments on its
foreign debt and the creditors have not waived any defaults or agreed to
forebear the exercise of their rights, its creditors are entitled to accelerate
the maturity of its obligations and to seek to exercise remedies, including,
without limitation, seeking to obtain and enforce judgment liens against the
Bank. In addition, due to cross-default provisions, the Bank's failure to make
certain scheduled payments of interest or principal constitute an event of
default under many of its other financing agreements (including loan agreements
and the indeture for its medium-term note program).

If as a result of the above-mentioned negotiations with its creditors, the Bank
were unable to reach a satisfactory rescheduling agreement with its creditors
and they attempted to exercise remedies in connection with its financial debt,
the Bank's financial condition and its operations would be materially and
negatively affected. The restructuring of the Bank's foreign debt is an
essential component of its operating ability.

The balance of the Bank's financial assitance from the Argentine Central Bank as
of December 31, 2002, was Ps.5,581.5 billion. Under Communique "A" 3940 of the
Argentine Central Bank the Bank in order to restructure its liabilities with the
Argentine Central Bank into liabilities maturing in 70 or 120 monthly
installments the Bank, before December 5, 2003, must receive the approval of the
Argentine Central Bank to the terms and conditions for the restructuring of its
foreign debt.

Valuation reserves, impairment charges and estimates of market values on assets,
as established by the Group for U.S. GAAP purposes are subject to significant
assumptions of future cash flows and interest rates for discounting such cash
flows. Losses on the exchange of government bonds, impairment charges on loans
to Argentine provincial governments, and on retained interests in securitization
trusts were significantly affected by high discount rates at December 31, 2002
and 2001. Should the discount rates change in the future years, the carrying
amounts and charges to income and shareholders' equity will also change. In
addition, as estimates to future cash flows change, so to will the carrying
amounts which are dependent on such cash flows. It is at least reasonably
possible that changes to the carrying amounts of loans, investments and other
assets will be adjusted in the near term in amounts that are material to the
Group's financial position and results of operations.

The Bank is entitled to receive compensation from the Argentine Government in
the form of Compensatory and Hedge Bonds (see Note 1). The receipt of the Bonds
is subject to the approval of the Argentine Central Bank. It is possible that
the argentine Central Bank will alter the Compensatory and hedge Bonds to when
the Bank claims it is entitled in amounts that could be material to Grupo
Galicia. In addition, the market value of the Bonds received or to be received
will fluctuate significantly as the market for such bonds develops more fully.
Therefore, the ultimate settlement of these bonds may differ significantly from
the carrying value, at December 31, 2002 or any future date.

                                     F-100

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

As indicated in Note 1 to the financial statements, there is substantial doubt
as to the Group's ability to continue as a going concern. As a result, deferred
tax assets are generally not recognized. For U.S. GAAP purposes, a valuation
allowance against deferred tax assets of Ps.2,416,076 and Ps.3,551,283 has been
established as it is more likely than not that those deferred tax assets will
not be realized for the fiscal years ended December 31, 2002 and 2001
respectevely. Certain rulings in the future, such as whether loans to the
government will be able to offset debt payable to the government, may affect
positively the realization of the associated deferred tax assets. However, the
realization of new deferred tax assets generated in the short term will be
subject to the "more likely than not" criteria applied at December 31, 2002.

40. PARENT ONLY FINANCIAL STATEMENTS

The following are the unconsolidated balance sheets of Grupo Financiero Galicia
S.A. at December 31, 2002 and 2001 and the related unconsolidated statements of
income, and cash flows for the fiscal years ended December 31, 2002 and 2001.

BALANCE SHEETS (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                                 GRUPO GALICIA
                                                          -----------------------------
                                                                   DECEMBER 31,
                                                          -----------------------------
                                                              2002           2001
                                                          -----------------------------
<S>                                                       <C>            <C>
ASSETS
A. Cash and due from banks
Cash...........................................           Ps.      1,018  Ps.        13
Banks and correspondents.......................                      264            341
Other.........................................                         -              -
                                                          --------------  -------------
                                                                   1,282            354
D. Other receivables resulting from financial
brokerage
Unlisted negotiable obligations.........................         148,697              -
Other receivables included in the debtor
classification regulations .............................          34,589        143,862
Accrued interest receivable included in the debtor
classification regulations..............................             313            118
                                                          --------------  -------------
                                                                 183,599        143,980
F. Equity investment in other companies
In financial institutions...............................       1,439,635      2,867,115
Other...................................................          38,997         44,147
                                                          --------------  -------------
                                                               1,478,632      2,911,262
G. Miscellaneous receivables
Other...................................................             193          2,142
                                                          --------------  -------------
                                                                     193          2,142

H. Fixed assets.........................................           3,521          1,208

J. Intangible assets
Goodwill................................................          13,559         20,005
Organization and development expenses...................             163            210
                                                          --------------  -------------
                                                                  13,722         20,215

                                                          --------------  -------------
                  TOTAL ASSETS..........................  Ps.  1,680,949  Ps. 3,079,161
                                                          ==============  =============
</TABLE>

                                     F-101

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

<TABLE>
<S>                                                       <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

M. Miscellaneous liabilities
Directors and syndics fees payable......................  Ps.        120  Ps.       262
Other...................................................          56,354          2,152
                                                          --------------  -------------
                                                                  56,474          2,414
                                                          --------------  -------------
         TOTAL LIABILITIES..............................  Ps.     56,474  Ps.     2,414
SHAREHOLDERS' EQUITY ...................................  Ps.  1,624,475  Ps. 3,076,747
                                                          --------------  -------------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.....  Ps.  1,680,949  Ps. 3,079,161
                                                          ==============  =============
</TABLE>

                                     F-102

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

STATEMENT OF INCOME (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                                   GRUPO GALICIA
                                                          ------------------------------
                                                          FISCAL YEAR ENDED DECEMBER 31,
                                                          ------------------------------
                                                              2002                2001
<S>                                                       <C>              <C>
A. Financial income
Interest on Notes.......................................              74               -
Interest income from other receivables resulting
from financial brokerage................................           7,035           1,166
Net income from government and corporate securities.....              11               -
Adjustment by application of adjusting index............             442               -
Other...................................................  Ps.    196,932   Ps          -
                                                          --------------   -------------
                                                          Ps.    204,494   Ps.     1,166
B. Financial expenses
Interest on current accounts............................               1               -
                                                          --------------   -------------
                                                          Ps.          1   Ps.         -

Gross brokerage margin..................................         204,493           1,166

E. Expenses for services
Commissions.............................................               2               4
                                                          --------------   -------------
                                                          Ps.          2   Ps.         4

Monetary loss from financial intermediation.............  Ps.   (167,026)              -

G. Administrative expenses
Personnel expenses......................................           1,118           2,045
Directors and syndics fees..............................             152             262
Other fees..............................................           3,058           2,058
Advertising and publicity...............................               -               2
Taxes...................................................             643             500
Other operating expenses................................           1,849           2,163
Other...................................................             248             371
                                                          --------------   -------------
                                                          Ps.      7,068   Ps.     7,401

Monetary gain from operating expenses...................  Ps.        227   Ps.         -

Net income from financial brokerage                       Ps.     30,624   Ps.    (6,239)

H. Miscellaneous income
Net income on long term investments.....................               -         270,645
Other...................................................             593             926
                                                          --------------   -------------
                                                          Ps.        593   Ps.   271,571

I. Miscellaneous losses
Net income on long term investments(1)..................       1,427,469               -
Other...................................................           4,209           3,078
                                                          --------------   -------------
                                                          Ps.  1,431,678   Ps.     3,078

Monetary gain (loss) on other transactions..............  Ps.        400   Ps.         -

Income tax..............................................  Ps.     58,732   Ps.         -
                                                          --------------   -------------

Net income for the period...............................  Ps  (1,458,793)  Ps.   262,254
                                                          ==============   =============
</TABLE>

(1) Includes the effect on the foreign currency position compensation.

                                     F-103

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

STATEMENT OF CASH FLOWS (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                                GRUPO GALICIA
                                                       -------------------------------
                                                       FISCAL YEARS ENDED DECEMBER 31,
                                                       -------------------------------
                                                            2002              2001
                                                       -------------------------------
<S>                                                    <C>               <C>
CHANGES IN CASH
Cash at the beginning of the period................    Ps.        354    Ps.       240
Increase / (decrease) in cash......................               928              114
                                                       --------------    -------------
CASH AT END OF PERIOD                                           1,282              354

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Less:
Operating expenses paid............................            (8,357)          (6,942)
Plus:
Other operating income received....................             6,939           12,073
                                                       --------------    -------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES....            (1,418)           5,131

OTHER SOURCES OF CASH

Increase in short-term debts.......................               396                -
Increase in short-term investment..................           161,153                -
Cash dividends.....................................                 -          116,526
Other sources of cash..............................             4,470            4,673
                                                       --------------    -------------
OTHER SOURCES OF CASH..............................           166,019          121,199

OTHER USES OF CASH
Increase in short-term loans.......................            (1,439)               -
Decrease in short-term debts.......................                 -           (1,313)
Increase in fixed assets...........................               (20)            (271)
Increase in long-term investments..................            (4,184)         (52,907)
Dividends paid.....................................                 -          (70,753)
Other uses of cash.................................          (158,030)            (972)
                                                       --------------    -------------
TOTAL OTHER USES OF CASH...........................          (163,673)        (126,216)
                                                       --------------    -------------
INCREASE / ( DECREASE) IN CASH.....................    Ps.        928    Ps.       114
                                                       ==============    =============
</TABLE>

                                     F-104

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

NEW AUTHORITATIVE PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") has issued certain Statements
of Financial Accounting Standards ("SFAS") which are applicable to the Bank, but
are not yet required and have not yet been adopted.

In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4, 44, and
64, Amendment of SFAS No. 13, and Technical Corrections as of April 2002". SFAS
No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of
Debt," SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers," and
SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". As a result, gains and losses from extinguishment of debt will no
longer be classified as extraordinary items unless they meet the criteria of
unusual or infrequent as described in APB Opinion No. 30, "Reporting the Results
of Operations -Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions". In
addition, SFAS No. 145 amends SFAS No. 13, "Accounting for Leases," to eliminate
an inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. SFAS No. 145 is effective for fiscal years beginning after May 15,
2002. Management is currently evaluating the impact the adoption of SFAS No. 145
will have on the consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". The issuance of SFAS No. 146 nullifies the
former guidance provided by the Emerging Issues Task Force ("EITF") Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring"
("EITF 94-3"). SFAS No. 146 requires the recognition of a liability for costs
associated with exit or disposal activity when the liability is incurred, rather
then on the date commitment to an exit or disposal plan. SFAS No. 146 is
effective for liabilities, related to exit or disposal activities, which are
incurred after December 31, 2002, while earlier application is encouraged.
Management is currently evaluating the impact the adoption of SFAS No. 146 will
have on the consolidated financial statements.

The FASB issued SFAS No. 147, "Acquisitions of Certain Financial Institutions"
("SFAS No. 147"). SFAS No. 147 amends SFAS No. 72, "Accounting for Certain
Acquisitions of Banking or Thrift Institutions," to remove the acquisition of
financial institutions from the scope of that statement and provides guidance on
the accounting for the impairment or disposal of acquired long-term
customer-relationship intangible assets. Except for transactions between two or
more mutual enterprises, SFAS No. 147 requires acquisitions of financial
institutions that meet the definition of a business combination to be accounted
for in accordance with SFAS No. 141 and SFAS No. 142. The provisions of SFAS No.
147 are effective on October 1, 2002, with earlier application permitted.
Management is currently evaluating the impact the adoption of SFAS No. 147 will
have on the consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FAS 123" ("SFAS No.
148"). SFAS No. 148 continues to permit entities to apply the intrinsic method
of APB 25, "Accounting for Stock Issued to Employees", however, SFAS No. 148 is
intended to encourage companies to adopt the accounting provisions of SFAS No.
123, "Accounting for Stock-Based Compensation". SFAS No. 148 provides three
transition methods for companies who choose to adopt the provisions of SFAS No.
123, the prospective method, the modified prospective method and the retroactive
restatement method. In addition, SFAS No. 148 mandates certain new disclosures.
SFAS No. 148 is effective for fiscal years ending after December 15, 2002, with
early adoption permitted. Management is currently evaluating the impact that the
adoption of SFAS No. 148 will have on the consolidated financial statements.

                                     F-105

<PAGE>

                GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 For the fiscal years ended December 31, 2002 and 2001, for the six-months ended
          December 31, 2000 and for the fiscal year ended June 30, 2000
     (Expressed in thousands of constant Argentine pesos as of December 31,
                             2002, except as noted)

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133. SFAS No. 149 is effective prospectively for contracts entered into or
modified after June 30, 2003 and prospectively for hedging relationships
designated after June 30, 2003. Management is currently evaluating the impact
the adoption of SFAS No. 149 will have on the consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (an interpretation of FASB Statements No.
5, 57, and 107 and rescission of Interpretation No. 34)." FIN 45 clarifies the
requirements of SFAS No. 5, "Accounting for Contingencies, relating to a
guarantor's accounting for, and disclosure of, the issuance of certain types of
guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor
must recognize a liability for the fair value of the obligation it assumes under
that guarantee. FIN 45's provisions for initial recognition and measurement
should be applied on a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantor's fiscal year-end. The
guarantor's previous accounting for guarantees that were issued before the date
of FIN 45's initial application may not be revised or restated to reflect the
effect of the recognition and measurement provisions of the Interpretation. The
disclosure requirements are effective for financial statements of both interim
and annual periods that end after December 15, 2002. Management is currently
evaluating the impact the adoption of FIN 45 will have on the consolidated
financial statements.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an interpretation of ARB 51." The
primary objectives of FIN 46 are to provide guidance on the identification of
entities for which control is achieved through means other than through voting
rights ("variable interest entities" or "VIEs") and how to determine when and
which business enterprise should consolidate the VIE (the "primary
beneficiary"). This new model for consolidation applies to an entity which
either (1) the equity investors (if any) do not have a controlling financial
interest or (2) the equity investment at risk is insufficient to finance that
entity's activities without receiving additional subordinated financial support
from other parties. In addition, FIN 46 requires that both the primary
beneficiary and all other enterprises with a significant variable interest in a
VIE make additional disclosures. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 applies to public enterprises as of the
beginning of the applicable interim or annual period, and it applies to
nonpublic enterprises as of the end of the applicable annual period. Management
is currently evaluating the impact that the adoption of FIN 46 will have on the
consolidated financial statements.

                                     F-106