---

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# UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

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FORM 20-F

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|_| REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934

OR

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

For the fiscal year
ended December 31, 2003

OR

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

For the transition
period from ______ to _______

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Commission File
Number 1-11414

BANCO
LATINOAMERICANO DE EXPORTACIONES, S.A.(Exact name of Registrant as specified in
its charter)

|                                                | 
|----------------------------------------------- | 
|LATIN AMERICAN EXPORT BANK                      | 
|(Translation of Registrants name into English) | 



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Calle
  50 y Aquilino de la Guardia 
  Apartado 6-1497 El Dorado 
  Panama City, Republic of Panama 
  (507) 210-8500(Address and telephone number of Registrants principal executive offices)

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Securities
  registered or to be registered pursuant to Section 12(b) of the Act.



|                     | 
|-------------------- | 
|Title of each class  | 
|Class E Common Stock | 



Securities
  registered or to be registered pursuant to Section 12(g) of the Act.

None

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.

# 

|           | 
|---------- | 
|6,342,189  | 
|3,466,702  | 
|29,543,847 | 
|39,352,738 | 

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.

| | |X|
      Yes |  | |_|
      No | 
| | ------------- |  | ------------ | 



Indicate by check mark which
  financial statement item the Registrant has elected to follow.

| | |_|
      Item 17 |  | |X|
      Item 18 | 
| | ----------------- |  | ----------------- | 



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| |  | 
| |  | 

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# BANCO LATINOAMERICANO
    DE EXPORTACIONES, S.A.

# TABLE OF
    CONTENTS

|        |  | Page                                                         
|------- |  | -------------------------------------------------------------
|Item 1. |  | Identity of Directors,
      Senior Management and Advisers  
|        |  |                                                              
|Item 2. |  | Offer Statistics
      and Expected Timetable                
|        |  |                                                              
|Item 3. |  | Key
      Information                                        
|3.A     |  | Selected Financial
      Data                                
|3.B     |  | Capitalization and
      indebtedness                        
|3.C     |  | Reasons for the offer
      and use of proceeds              
|3.D     |  | Risk Factors                                                 
|        |  |                                                              
|Item 4. |  | Information on the
      Company                             
|4.A     |  | History and Development
      of the Company                 
|4.B     |  | Business Overview                                            
|4.C     |  | Organizational Structure                                     
|4.D     |  | Property, Plants and
      Equipment                         
|        |  |                                                              
|Item 5. |  | Operating and Financial
      Review and Prospects           
|5.A     |  | Operating Results                                            
|5.B     |  | Liquidity and Capital
      Resources                        
|5.C     |  | Research and Development,
      Patents and Licenses, etc.   
|5.D     |  | Trend Information                                            
|5.E     |  | Off-Balance Sheet Arrangements                               
|5.F     |  | Contractual Obligations
      and Commercial Commitments     
|        |  |                                                              
|Item 6. |  | Directors, Senior
      Management and Employees             
|6.A     |  | Directors and Senior
      Management                        
|6.B     |  | Compensation                                                 
|6.C     |  | Board Practices                                              
|6.D     |  | Employees                                                    
|6.E     |  | Share Ownership                                              
|        |  |                                                              
|Item 7. |  | Major Shareholders
      and Related Party Transactions      
|7.A     |  | Major Shareholders                                           
|7.B     |  | Related Party Transactions                                   
|7.C     |  | Interests of Experts
      and Counsel                       
|        |  |                                                              
|Item 8. |  | Financial Information                                        
|8.A     |  | Consolidated Statements
      and Other Financial Information
|8.B     |  | Significant Changes                                          



| | 2 | 
| | - | 

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|Item 9.   |  | The Offer and Listing                                                              |  | 87  | 
|--------- |  | ---------------------------------------------------------------------------------- |  | --- | 
|9.A       |  | Offer and Listing
      Details                                                    |  | 87  | 
|9.B       |  | Plan of Distribution                                                               |  | 88  | 
|9.C       |  | Markets                                                                            |  | 88  | 
|9.D       |  | Selling Shareholders                                                               |  | 88  | 
|9.E       |  | Dilution                                                                           |  | 88  | 
|9.F       |  | Expenses of the Issue                                                              |  | 88  | 
|          |  |                                                                                    |  |     | 
|Item 10.  |  | Additional Information                                                             |  | 88  | 
|10.A      |  | Share Capital                                                                      |  | 88  | 
|10.B      |  | Memorandum and Articles
      of Association                                       |  | 88  | 
|10.C      |  | Material Contracts                                                                 |  | 91  | 
|10.D      |  | Exchange Controls                                                                  |  | 91  | 
|10.E      |  | Taxation                                                                           |  | 91  | 
|10.F      |  | Dividends and Paying
      Agents                                                  |  | 95  | 
|10.G      |  | Statement by Experts                                                               |  | 95  | 
|10.H      |  | Documents on Display                                                               |  | 96  | 
|10.I      |  | Subsidiary Information                                                             |  | 96  | 
|          |  |                                                                                    |  |     | 
|Item 11.  |  | Quantitative and
      Qualitative Disclosure About Market Risk                    |  | 96  | 
|          |  |                                                                                    |  |     | 
|Item 12.  |  | Description of
      Securities Other than Equity Securities                       |  | 99  | 
|          |  |                                                                                    |  |     | 
|Item 13.  |  | Defaults, Dividend
      Arrearages and Delinquencies                              |  | 100 | 
|          |  |                                                                                    |  |     | 
|Item 14.  |  | Material Modifications
      to the Rights of Security Holders and Use of Proceeds |  | 100 | 
|          |  |                                                                                    |  |     | 
|Item 15.  |  | Controls and Procedures                                                            |  | 100 | 
|          |  |                                                                                    |  |     | 
|Item 16.  |  | Reserved                                                                           |  | 100 | 
|Item 16A. |  | Audit Committee Financial
      Expert                                             |  | 100 | 
|Item 16B. |  | Code of Ethics                                                                     |  | 100 | 
|Item 16C. |  | Principal Accountant
      Fees and Services                                       |  | 100 | 
|Item 16D. |  | Exemptions from the
      Listing Standards for Audit Committees                   |  | 101 | 
|Item 16E. |  | Purchases of Equity
      Securities by the Issuer and Affiliated Purchasers       |  | 101 | 
|          |  |                                                                                    |  |     | 
|Item 17.  |  | Financial Statements                                                               |  | 101 | 
|          |  |                                                                                    |  |     | 
|Item 18.  |  | Financial Statements                                                               |  | 101 | 
|          |  |                                                                                    |  |     | 
|Item 19.  |  | Financial Statements
      and Exhibits                                            |  | 101 | 
|          | 

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In
  this Annual Report on Form 20-F (this Annual Report), all references
  to the Bank or BLADEX are to Banco Latinoamericano de
  Exportaciones, S.A., a specialized multinational bank incorporated under the
  laws of the Republic of Panama (Panama) on November 30, 1977, and
  its subsidiaries.



| | 3 | 
| | - | 

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All
  references to dollars or $ are to United States dollars.
  The numbers and percentages set out in this Annual Report have been rounded
  and, accordingly, may not total exactly.

The
    Bank accepts deposits and raises funds principally in United States dollars,
    grants loans mostly in United States dollars and publishes its Consolidated
    Financial Statements in United States dollars.

This
    Annual Report contains forward-looking statements of expected future developments.
    The Bank wishes to ensure that such statements are accompanied by meaningful
    cautionary statements pursuant to the safe harbor established in the Private
    Securities Litigation Reform Act of 1995. The forward-looking statements in
    this Annual Report refer to the possibility that the Bank will need to renegotiate
    and restructure or write-off certain of its Argentine loans, the adequacy
    of the Banks allowance for credit losses to address the likely impact
    of the Argentine crisis and other credit risks on the Banks loan portfolio,
    the necessity of making additional provisions for credit losses, the Banks
    ability to achieve future growth, to reduce its liquidity levels and increase
    its leverage, the Banks ability to maintain its investment-grade credit
    ratings, the availability and mix of future sources of funding for the Banks
    lending operations, the adequacy of the Banks sources of liquidity to
    cover large deposit withdrawals and the impact of the crisis in Argentina
    and developments in other countries in Latin America and globally on the Banks
    results of operations and financial condition. These forward-looking statements
    reflect the expectations of the Banks management and are based on currently
    available data; however, actual experience with respect to these factors is
    subject to future events and uncertainties, which could materially impact
    the Banks expectations. Among the factors that can cause actual performance
    and results to differ materially are as follows: a decline in the willingness
    of international lenders and depositors to provide funding to the Bank, causing
    a further contraction of the Banks credit portfolio, adverse economic
    or political developments in Central and South America and the Caribbean (the
    Region), particularly in Argentina or Brazil, which could increase
    the level of impaired loans in the Banks loan portfolio and, if sufficiently
    severe, result in the Banks allowance for probable credit losses being
    insufficient to cover losses in the portfolio, unanticipated developments
    with respect to international banking transactions (including, among other
    things, interest rate spreads and competitive conditions), a decision by credit
    rating agencies to further reduce the Banks credit ratings, events in
    Argentina, Brazil or other countries in the Region unfolding in a manner that
    is detrimental to the Bank or which result in adequate liquidity being unavailable
    to the Bank.

Forward-looking
    statements speak only as of the date they are made, and the Bank does not
    undertake any obligation to update them in light of new information or future
    developments.

# Terms Relating
    to the Banks Credit Portfolio

As
    used in this Annual Report, the following terms relating to the Banks
    credit portfolio have the meanings set forth below, unless otherwise indicated.

Credit
  portfolio consists of loans, securities purchased under agreements to
  resell, selected securities held to maturity and available for sale (presented
  at their estimated fair value) and contingencies. Certain investment securities
  (selected investment securities) are considered part of the Banks
  credit portfolio when the acquisition of such securities is subject to the same
  lending policies, including credit approval criteria, as the rest of the credit
  portfolio.



| | 4 | 
| | - | 

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Contingencies
  consist of financial instruments with off-balance sheet credit risk, including
  letters of credit, guarantees and credit commitments, and customers liabilities
  under acceptances.

References
    to provision for loan losses are to additions to the allowance
    for loan losses in a particular period and charged to income. References to
    allowance for loan losses are to the aggregate allowance for loan
    losses shown as of a particular date as a balance sheet item.

Total
  loans includes total performing loans and total impaired loans. Total
  impaired loans includes only principal. For a description of the Banks
  policies regarding the classification of loans as impaired, see Information
  on the CompanyAsset Quality.

Total
    loans, net refers to total loans less allowance for loan losses and
    unearned income.



| | 5 | 
| | - | 

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# PART I

# Item
  1. Identity of Directors, Senior Management and Advisers

Not
  required in this Annual Report.

# Item
  2. Offer Statistics and Expected Timetable

Not
  required in this Annual Report.

# Item
  3. Key Information

# 3.A
  Selected Financial Data

The
    following table presents consolidated selected financial data for the Bank.
    The financial data presented below are at December 31, 1999, 2000, 2001, 2002
    and 2003 and for the years then ended and are derived from the Banks
    consolidated financial statements for the years indicated, which were prepared
    in accordance with U.S. generally accepted accounting principles (U.S.
    GAAP) and audited by KPMG Peat Marwick. The Consolidated Financial Statements
    of the Bank at December 31, 2002 and 2003 and for each of the years in the
    three-year period ended December 31, 2003 (the Consolidated Financial
    Statements) are included in this Annual Report, together with the report
    of KPMG Peat Marwick thereon. The information below is qualified in its entirety
    by the detailed information, both financial and otherwise, included elsewhere
    herein and should be read in conjunction with Information on the Company,
    Operating and Financial Review and Prospects and the Consolidated
    Financial Statements and Notes thereto included in this Annual Report.

# Consolidated
    Selected Financial Information

|                                                                  | At and for the Year Ended December 31,
|----------------------------------------------------------------- | --------------------------------------
|
|
|Income Statement Data:                                            |                                       
|Net interest income (1)                                           |                                       
|Provision for loan losses (2)                                     |                                       
|                                                                  |                                       
|Net interest income (loss) after
      provision for loan         |                                       
|losses                                                            |                                       
|                                                                  |                                       
|Other income (expense):                                           |                                       
|Commission income, net (1)                                        |                                       
|Provision for losses on off-balance
      sheet credit            |                                       
|risk                                                              |                                       
|Derivatives and hedging activities                                |                                       
|Impairment loss on securities
      (3)                           |                                       
|Gain on early extinguishment
      of debt                        |                                       
|Gain on sale of securities available
      for sale               |                                       
|Gain (loss) on foreign currency
      exchange                    |                                       
|Other income                                                      |                                       
|                                                                  |                                       
|Net other income (expense)                                        |                                       
|                                                                  |                                       
|Total operating expenses                                          |                                       
|Income (loss) from continuing
      operations                    |                                       
|Discontinued operations:                                          |                                       
|Loss from operations and disposal
      of segment                |                                       
|                                                                  |                                       
|Income (loss) before cumulative
      effect of accounting change |                                       
|Cumulative effect of accounting
      change                      |                                       
|                                                                  |                                       
|Net income (loss)                                                 |                                       



| | 6 | 
| | - | 

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|                                                                   | At and for the Year Ended December 31,
|------------------------------------------------------------------ | --------------------------------------
|
|
|Net income (loss) available
      for common stockholders          |                                       
|Balance Sheet Data:                                                |                                       
|                                                                   |                                       
|Securities purchased under agreements
      to resell              |                                       
|Investment securities                                              |                                       
|Impaired loans                                                     |                                       
|Loans (including impaired loans)                                   |                                       
|Allowance for loan losses                                          |                                       
|Total assets                                                       |                                       
|Total deposits                                                     |                                       
|Short-term borrowings and placements                               |                                       
|Medium and long-term borrowings
      and placements               |                                       
|Total liabilities                                                  |                                       
|Total stockholders equity                                         |                                       
|Average number of shares outstanding                               |                                       
|Per Common Share Data:                                             |                                       
|Net income (loss), after
      Preferred Stock dividend and before |                                       
|cumulative
      effect of accounting change                       |                                       
|Diluted earnings per share
      before cumulative effect of       |                                       
|accounting
      change                                            |                                       
|Net income (loss), after
      Preferred Stock dividend and after  |                                       
|cumulative
      effect of accounting change                       |                                       
|Diluted earnings per share
      after cumulative effect of        |                                       
|accounting
      change                                            |                                       
|Net income (loss) from
      continuing operations                 |                                       
|Book value (period end)                                            |                                       
|Cash dividends per share                                           |                                       
|Selected Financial Ratios:                                         |                                       
|Performance Ratios:                                                |                                       
|Return on average assets
      before cumulative effect of         |                                       
|accounting
      change                                            |                                       
|Return on average assets
      after cumulative effect of          |                                       
|accounting
      change                                            |                                       
|Return on average stockholders
      equity before cumulative     |                                       
|effect
      of accounting change                                  |                                       
|Return on average stockholders
      equity after cumulative      |                                       
|effect
      of accounting change                                  |                                       
|Net interest margin (4)                                            |                                       
|Net interest spread (4)                                            |                                       
|Total operating expenses
      to total average assets             |                                       
|Cash dividend payout ratio                                         |                                       
|Asset Quality Ratios:                                              |                                       
|Impaired loans to loans,
      net of unearned                     |                                       
|income
      (5)                                                   |                                       
|Net charge-offs to loans,
      net of unearned income             |                                       
|Allowance for loan losses
      to loans, net of unearned income   |                                       
|Allowance for loan losses
      to non-accruing loans              |                                       
|Reserve for losses on
      off-balance sheet credit risks to      |                                       
|total
      contingencies                                          |                                       
|Capital Ratios:                                                    |                                       
|Stockholders equity
      to total assets                         |                                       



| | 7 | 
| | - | 

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|                                                 | At and for the Year Ended December 31,
|------------------------------------------------ | --------------------------------------
|
|
|Tier 1 capital to risk-weighted
      assets (6) |                                       
|Total capital to risk-weighted
      assets (6)  |                                       
|                                                 |                                       

|(1) | For 1999
           2002, commission expense related to borrowings and placements
          was reclassified from commission expense and other charges to interest
          expense to conform with the required presentation for 2003 pursuant
          to U.S. GAAP.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For information
          regarding provision for loan losses, see Operating and Financial
          Review and ProspectsResults of Operations.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For information
          regarding impairment loss on securities see Information on the
          CompanyBusiness OverviewAsset QualityImpaired Securities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | For information
          on regard to calculation of the net interest margin and the net interest
          spread, see Operating and Financial Review and ProspectsResults
          of OperationsNet Interest Income.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The Bank
          did not have any repossessed assets or troubled debt restructurings
          as defined in Statement of Financial Accounting Standards No. 15 at
          any of the dates indicated above, with the exception in 2003 of $346.7
          million, and in 2002, of $47.4 million of Argentine obligations. At
          December 31, 2003, a Brazilian impaired loan in the amount of $47.0
          million was in the process of being restructured. Most of the Banks
          credit portfolio in Argentina was classified as impaired during 2002,
          and 80% of the Argentine credit portfolio had been restructured at December
          31, 2003, another 4% was in the process of being restructured, 8% had
          not been restructured and the remaining 8% was performing in accordance
          with original contract terms.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Calculated
          using the U.S. Federal Reserve Boards 1992 fully phased in risk-weighted
          capital guidelines. Although the Bank is not subject to the risk-based
          capital or leverage requirements of the Federal Reserve Board, if these
          requirements did apply to the Bank, management believes that the capital
          ratios for the Bank would be as presented. The Banks total capital
          to risk-weighted asset ratio calculated according to applicable Panama
          Banking Law provisions was 27.1% at December 31, 2003.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 3.B
  Capitalization and indebtedness

Not
  required in this Annual Report.

# 3.C
  Reasons for the offer and use of proceeds

Not
  required in this Annual Report.

# 3.D
  Risk Factors

Economic
    conditions in the Region, where the Bank conducts all its lending activities,
    and where past economic difficulties have resulted in debt restructurings
    and loan losses for lenders, although showing improvement, have been highly
    volatile since the end of 2001, reflecting the volatility in U.S. and global
    economic conditions, and could deteriorate further and require the Bank to
    further increase its credit loss allowance.

All
  of the Banks lending activities are conducted with borrowers in the Region.
  At various times in the past, countries in the Region have experienced severe
  economic difficulties, including periods of slow or negative growth, large government
  budget deficits, high inflation, currency devaluation and unavailability of
  foreign exchange, including dollars. As a result, since the Bank began operations
  in 1979 many governments and public and private institutions in the Region have
  at various times been unable to make interest and principal payments on their
  external debt, and much of the external debt of the Region has been restructured
  to provide for extensions of repayment schedules, grace periods during which
  payments of principal have been suspended and, in certain cases, reduced principal
  and/or rates of interest. Although these developments during the 1980s
  and 1990s did not have a material impact on the timely repayment of interest
  or principal on the Banks loans to banks in the Region, short-term trade
  debt was generally exempt from such restructuring and certain countries in the
  Region granted a preferred creditor status to the Bank and negotiated directly
  with the Bank concerning the Banks credit portfolio, there can be no assurance
  that a significant deterioration of economic conditions in the Region would
  not result in a reduction in the Banks credit portfolio resulting from
  increased risk levels, reduced access by the



| | 8 | 
| | - | 

---



Bank to funding, and increased
    loan losses or otherwise adversely affect the financial condition or results
    of operations of the Bank. In addition, there is no assurance that, if future
    financial crises were to occur, the governments in the Region would grant
    the Bank the same special recognition with respect to debt restructuring that
    they granted in the past.

Adverse
    U.S. and global economic conditions during 2001 and 2002 affected economic
    conditions in the Region. Because the United States and Europe are the principal
    export markets for the Region, these global conditions adversely affected
    economies in the Region. Although economic conditions have improved in many
    countries in the Region where the Bank conducts lending activities, this improvement
    may not be sustained, which could require the Bank to make further loan loss
    provisions, which could produce additional losses and reduce the Banks
    capital.

The crisis in Argentina
  led the Bank to classify almost the total Argentine credit portfolio
  as impaired and required the Bank to increase its allowance for credit losses
  during 2002 which resulted in a large net loss and reduction of the Banks
  stockholders equity. It also resulted in the major credit rating agencies downgrading
  the Banks credit ratings. Although the Bank has reduced its Argentine
  credit exposure substantially and the situation in Argentina appears to have
  stabilized somewhat, a worsening of the situation could result in higher losses
  on the Banks remaining Argentine loans than the Bank has provided for.
  This could reduce the Banks earnings, its capital base and its credit
  ratings.

A
    prolonged deterioration in Argentinas economic environment, financial
    condition and investor confidence resulted in late December 2001 in a profound
    crisis, which forced the Argentine government to adopt stringent measures.
    These included a freeze on bank deposits, forced conversion of dollar-denominated
    bank deposits into Argentine pesos, currency devaluation, foreign exchange
    controls, bank holidays and restrictions on repayment as well as a default
    by the government on $132 billion of foreign debt in December 2001. During
    2003 the Argentine GDP grew approximately 7%, partially offsetting the nearly
    11% drop in 2002. It also achieved a fiscal surplus as well as improvements
    in unemployment, balance of payments, inflation and other indicators.

The
    deterioration of the Argentine economy made it more difficult for many of
    the Banks Argentine obligors to repay their loans on schedule. Also,
    although some seemingly had resources to meet obligations, they suspended
    payments because of the uncertainty and disruption caused by the crisis.

The
    Banks Argentine credit portfolio at March 31, 2004 amounted to $398.7
    million, which represented a reduction of $715.7 million from December 31,
    2001. All of the Banks exposure in Argentina continues to be denominated
    in U.S. dollars (with the exception of a small portion denominated in Euros).
    None of the Banks loans in Argentina have been converted to Argentine
    pesos. During 2003, the Bank collected interest from Argentine borrowers of
    approximately $24 million representing 86% of interest due from those borrowers.
    At June 30, 2002, 97% of the Banks total credit portfolio in Argentina
    was classified as impaired and, since June 30, 2002, all interest income
    on the Banks Argentine impaired credit portfolio has been accounted
    for on a cash basis.

At
    December 31, 2003, 79.7% of the Argentine portfolio had been restructured,
    while the restructuring of 4.2% of the portfolio was under negotiation, 7.8%
    had not been restructured and was not paying interest and 8.3% was performing
    under original terms. As of March 31, 2004, the Bank had restructured $2.5
    million of these loans under negotiation, had received repayment of $28.3
    million of these restructured loans and had received repayment of $7.6 million
    of these performing loans representing a total collection of principal of
    $35.9 million during the first quarter of 2004.

Because
  of concerns about the collectability of the Banks Argentine credit portfolio,
  the Board of Directors and management increased the allowance for credit losses
  during 2002 by $278.8 million. As of March 31, 2004, the Banks total allowance
  for credit losses amounted to $236.9 million of which $176.5 million related



| | 9 | 
| | - | 

---



to the loan portfolio and
  contingencies in Argentina. As a result of the increase in the allowance for
  credit losses and a $44.3 million charge for impairment loss on Argentine securities
  during 2002, the Bank incurred a net loss for 2002 of $268.8 million. This also
  had the effect of reducing the Banks stockholders equity to $328.9
  million at December 31, 2002 from $598.4 million at December 31, 2001.
  At December 31, 2003, the Banks stockholders equity was $584.3 million
  reflecting the proceeds of the Banks 22 million share rights offering
  which was completed on June 27, 2003.

The
    Board of Directors and management believe that the $176.5 million of allowances
    for credit losses at March 31, 2004 related to the Banks exposure in
    Argentina is adequate to cover any Argentine credit charge-offs on the Banks
    Argentine loans and contingencies. Argentina is in default on its public sector
    external debt and there is no clarity as to the timing in which this issue
    would be resolved. A worsening of the situation could result in higher losses
    on the Banks remaining Argentine loans than the Bank has provided for.
    This could reduce the Banks earnings or produce additional losses, and
    could reduce the Banks capital base.

During
    the first quarter of 2002, the major credit rating agencies downgraded the
    Banks credit ratings due to its large Argentine credit exposure and
    the increasing risk of default among Argentine borrowers, in light of Argentinas
    deposit controls and currency devaluation. The downgrades also reflected the
    Banks large exposure in Brazil where political and economic uncertainty
    created concerns about whether the Bank would be required to create additional
    loan loss allowances. On August 12, 2002, Fitch IBCA, Inc (Fitch)
    further reduced its ratings on the Banks debt securities to below investment
    grade with a stable outlook. On August 5, 2003, Fitch raised its rating on
    the Banks debt securities to BBB-, an investment grade rating, reflecting
    the Banks improved financial condition and its capital and liquidity
    position as a result of the proactive management of the Banks Argentine
    credit portfolio, the successful capital raising activities, and the Banks
    renewed focus on trade finance. As of the date of this Annual Report, the
    Bank has long-term debt ratings of Baa3 from Moodys Investor Services,
    Inc. (Moodys), BBB- from Standard and Poors Ratings
    Services, a division of The McGraw-Hill Companies, Inc. (Standard &
    Poors), and BBB- from Fitch and short-term debt ratings of Prime
    3, A-3 and F3 from Moodys, Standard & Poors and Fitch,
    respectively. The Baa3 rating from Moodys, the BBB- rating from Standard
    & Poors and the BBB- rating from Fitch are investment-grade
    ratings and the ratings outlook from all three rating agencies is stable.

A
    further deterioration of the Argentine situation or difficulties in other
    countries in the Region where the Bank has large exposures could trigger downgrades
    in the Banks credit ratings from Moodys, Standard & Poors
    or Fitch to below investment-grade ratings. This would increase the Banks
    cost of funds, and reduce the Banks deposit base and access to the debt
    capital markets. In that case, the Banks ability to obtain the funding
    necessary to carry on its trade financing activities in Latin America at meaningful
    levels could be severely hampered.

Brazil has been performing
    satisfactorily to date. However, an eventual downturn in Brazil could have
    an adverse effect on earnings.

During
    2002, investors became increasingly uneasy about Brazil due to, among other
    factors, the situation in Argentina and an increasingly uncertain political
    environment leading up to the election at the end of October 2002 of Luiz
    Inácio Lula da Silva, the rapid decline in the value of Brazils
    currency compared with the U.S. dollar and speculation about the ability of
    Brazil to service its public debt, particularly its internal debt. After taking
    office in January 2003, the new government adopted conservative macroeconomic
    policies, which resulted in a positive reaction from the market and decreased
    the countrys perceived risk level in a very short period of time. It
    is still premature to evaluate the government policies and the consequent
    reaction from the capital markets and investors. The situation has improved
    as evidenced by a stabilized exchange rate, strong export performance, controlled
    rate of inflation and a substantial reduction in the countrys sovereign
    interest rate spread. Brazil did not default on its debt and the risk perception
    regarding Brazil has improved substantially.



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The
    Banks credit portfolio in Brazil amounted to $1,153.9 million at December
    31, 2003 compared to $1,183.1 million at December 31, 2002. As of December
    31, 2003, substantially all of the Banks loans to Brazilian borrowers
    were current and there were no past due amounts of interest or principle,
    with the exception of one rescheduled loan to a Brazilian corporation for
    $47.0 million, for which the Bank established a specific allowance for possible
    loan losses of $16.3 million. This loan was successfully restructured in March
    2004. Approximately 90.6% of the Banks portfolio in Brazil matures during
    the remainder of 2004, giving the Bank flexibility to reduce its exposure
    in Brazil should this become necessary. The Bank remains committed to continuing
    its lending activities in this very important market in the Region. Although
    Brazil has not defaulted on its trade related obligations and up until now
    the Bank has not had substantial losses on its Brazilian portfolio, adverse
    changes in the political and economic situation in Brazil could weaken the
    Banks Brazilian credit portfolio. If this were to occur, the Bank could
    be required to create further allowances for credit losses.

Determining the appropriate
    level for credit loss allowances requires assumptions and estimates during
    rapidly changing political and economic conditions in the Region. As a result,
    the Banks allowances for credit losses could be inadequate to cover
    credit losses related to the Banks loans and contingencies. If the Bank
    were required to create additional allowances for credit losses, it could
    result in significant losses for the Bank and reduce its equity capital.

At
    December 31, 2003, the total allowance for credit losses amounted to $258.3
    million, of which $195.4 million, representing specific allowances, related
    to impaired loans and contingencies in Argentina. There were also $16.3 million
    of specific allowances related to $47.0 million of exposure with a Brazilian
    corporation. At December 31, 2003, the Banks total loans and contingencies
    amounted to $2,636.7  million, of which $429.8 million, or 16.3%,
    represented loans and contingencies in Argentina. The remaining $46.6 million
    of the Banks allowance for credit losses represents a generic allowance
    which covers its $2.2 billion of loans and contingencies outstanding in countries
    other than Argentina.

The
    Board of Directors and management believe that the current allowance for credit
    losses is adequate to cover any charge offs that will be necessary on the
    Banks current credit portfolio. The Board of Directors and management
    will continue to maintain the allowance for credit losses at levels, which
    reflect the potential for political and economic instability in countries
    in the Region and economic cycles. Determining the appropriate level of allowances
    for credit losses necessarily requires managements judgment, including
    assumptions and estimates made in the context of rapidly changing political
    and economic conditions in many of the countries in the Region. As a result,
    the Banks current level of allowances could be inadequate to cover losses
    in the Banks credit portfolio. For example, it is possible that further
    deterioration in Argentina, or further pressure on other borrowers could require
    additional allowances, which would produce charges against the Banks
    earnings.

During 2002 and 2003,
    although the Bank did not experience liquidity difficulties, its weakened
    financial condition, downgrades in credit ratings, and increased risk perception
    of the Region did adversely affect its funding activities. The occurrence
    of similar events could do so again in the future.

During
    2002 and 2003, the Banks weakened financial condition and downgrades
    by the rating agencies affected the Banks funding activity, by making
    the Banks lenders and depositors less willing to lend or place funds
    with the Bank and by increasing the interest costs for the Bank. The Bank
    experienced in an orderly fashion, a 52.0% and a 24.5% decline in the Banks
    deposits and borrowings during 2002 and 2003, respectively, while maintaining
    an adequate liquidity position. In addition, the dramatic increase in the
    risk perception of Latin America resulted in a significant decline in the
    availability of credit lines to the Region. As a result, it has been difficult
    for Latin American borrowers, including the Bank, to access international
    debt markets for placements of securities. The Bank experienced a 48.6% and
    a 13.8% decline in its credit portfolio during 2002 and 2003, respectively,
    due to, among other things, these difficulties in funding. If the Bank experiences
    similar difficulties in the future, including a reduction of its investment
    grade credit ratings to below investment grade, the Banks funding activities
    could be similarly adversely affected.



| | 11 | 
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Concentration
    of the Banks lending activities in a relatively small number of countries
    could have an adverse impact on the Banks creditportfolio and, as a
    result, on the Banks financial condition and results of operations if
    one or more of those countries encounter further economic difficulties.

At
    December 31, 2003, approximately $1,968.9 million, or 69.2%, of the Banks
    credit portfolio was outstanding to borrowers in the following four countries:
    Brazil ($1,153.9 million, or 40.5%); Argentina ($435.1 million, or 15.3%);
    Mexico ($246.6 million, or 8.7%); and Chile ($133.3 million, or 4.7%). In
    addition, at December 31, 2003, 21.2% of the Banks total credits were
    to 5 borrowers in Brazil and 7.8% of total credits were to 3 borrowers in
    Mexico. The Banks exposure in each country where it extends credit is
    subject to the Banks Board of Directors approved country limit
    process, as recommended by the Banks management, that takes into account
    not only concentration issues, but also general political and economic risk
    in each country, prospects for business, type of financing (trade/non-trade)
    and funding considerations. The credit portfolio distribution by country reflects,
    among other factors, the relative gross domestic products (GDP)
    of the countries in which the Bank conducts its credit activities. This means
    that the Bank may frequently have larger exposure in countries that have relatively
    higher GDP. A significant deterioration, or further deterioration, of economic
    conditions in any of these countries or of the financial condition of any
    of these borrowers could require the Bank to create additional allowances
    for credit losses, or suffer further credit losses with the effect being accentuated
    because of this concentration.

Concentration
    of a substantial portion of the Banks funding activities on interbank
    deposits from central banks required the Bank to significantly reduce those
    deposits and could do so again in the future.

One
    of the Banks sources of funding for short-term loans is interbank deposits
    received principally from central banks in the Region. Historically, these
    deposits have represented approximately 35% of the Banks total liabilities.
    As of the end of 2003, several central banks resumed making deposits with
    the Bank representing a positive response to the Banks improved credit
    ratings outlook, successful capitalization program, and substantial reduction
    in exposure to Argentina. During 2002, these central banks withdrew a substantial
    portion of their deposits with the Bank in large part because of the deterioration
    in the Banks financial condition and the resulting downgrades in the
    Banks credit ratings. Overall deposits declined by 64.9% from $1,571.4
    million at December 31, 2001 to $552.0 million at December 31, 2002 and, as
    a result, among other factors, total loans declined by 46.8% from $4,733.7
    million at December 31, 2001 to $2,516.5 million at December 31, 2002. Despite
    this decline in deposits, the Bank was able to maintain a healthy net cash
    position throughout 2002 due to, among other things, the repayment of loans
    funded with these deposits, reflecting an asset and liability maturity profile
    that is basically matched. At December 31, 2002, deposits represented 21.3%
    of total liabilities, with the balance comprised of short-term obligations
    primarily from international banks and medium-term obligations primarily placed
    in the debt capital markets.

At
    December 31, 2003, the Banks overall deposits and total loans amounted
    to $703.0 million and $2,275.0 million, respectively, and deposits represented
    35.5% of total liabilities.

The
    Bank faces the risk that central banks, which withdrew deposits during 2002,
    will not increase the level of their deposits with the Bank, and will further
    reduce their deposits if the Bank suffers downgrades of its credit ratings.
    Failure by central banks to increase their deposit levels with the Bank will
    make it more difficult to obtain the funding necessary to increase its lending
    business and improve its profitability. Further withdrawals of deposits by
    these central banks could force the Bank to reduce its credit portfolio, thus
    reducing net interest income.

As a bank, the Bank
    faces liquidity risk, which is the risk of not having an adequate cash flow
    to repay its obligations on a timely basis.

As
    a bank, the Bank faces liquidity risk, which is the risk of not being able
    to maintain an adequate cash flow to repay its deposits and borrowings required
    to fund its credit portfolio on a timely basis. Failure to



| | 12 | 
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adequately manage the Banks
    liquidity risk could produce a liquidity shortage in which the Bank would
    not be able to fund these obligations as they become due. The Bank manages
    its liquidity risk by maintaining its liquidity funds, which are funds generated
    by demand deposits, call accounts and time deposits placed with it, in short
    term, highly liquid and high quality investments such as overnight and other
    short term deposits, negotiable money market instruments, commercial paper
    and other similar instruments. The primary objectives for these investments
    are security and liquidity combined with a market return. In order to manage
    the Banks liquidity needs, the Banks liquidity position is reviewed
    and monitored by the Board of Directors and management. The Board of Directors
    and management follow a conservative liquidity management strategy and in
    view of the volatility in the Region began gradually increasing its net cash
    position in the second quarter of 2001. During 2002 and 2003, the Bank was
    able to reduce its financial liabilities by approximately $2.7 billion and
    $609.1 million, respectively, in an orderly fashion while maintaining an adequate
    liquidity position. At December 31, 2003, liquidity levels amounted to $252.6
    million, representing a net cash position of 35.9% of total deposits.

Because
    Panama does not issue its own paper currency, the Banco Nacional de Panama
    does not act as a central bank in the traditional sense and is not a lender
    of last resort to the banking system in Panama. Accordingly, if the Bank faced
    a liquidity problem, it would have to rely on commercial sources of liquidity
    and would not have access to a central bank lender of last resort, as would
    a bank located in the United States or in certain other countries. In a liquidity
    problem, commercial sources of liquidity probably would not be adequate to
    meet the Banks liquidity needs, which would result in the failure of
    the Bank and the intervention of the Panama banking authorities. The central
    banks of other countries in Latin America would not be authorized to act as
    lenders of last resort for the Bank if it faced liquidity problems because
    the Bank is a Panamanian bank and not located in their respective countries.

As a bank, the Bank
    faces interest rate risk, which is caused by the gap in the repricing periods
    between interest earning assets and interest bearing liabilities. If not properly
    managed, this gap could reduce net interest income as interest rates fluctuate.

Until
    recently, the Banks interest rate risk arose from the Banks liability
    sensitive position in the short-term, which means that the Banks interest-bearing
    liabilities reprice more quickly than the Banks interest-earning assets.
    In this position, there is a potential adverse impact on the Banks net
    interest income that could result from increases in interest rates. At December
    31, 2003, the Banks cumulative interest rate gap was negative or liability
    sensitive. For more information see Item 5B. Liquidity and Capital Resources
     Interest Rate Sensitivity). At March 31, 2004, the Bank changed its
    asset and liability position to asset sensitive, which means that the Banks
    interest earning assets repriced more quickly than the Banks interest
    bearing liabilities. In this position, increases in interest rates would benefit
    the Banks net interest income. The Bank attempts to manage its interest
    rate risk by matching, where possible, the terms and repricing characteristics
    of its interest rate sensitive assets and liabilities. However, this is not
    always possible given the needs of the Banks borrowers and the available
    funding sources and thus the Bank faces the risk that mismatches will again
    occur in the future, and if they do, that sudden, or unexpectedly large, movements
    in interest rate levels will reduce the Banks net interest income.

Because
    the Bank lends in U. S. dollars to borrowers whose income generally is in
    local currencies, it faces the risk that significant local currency devaluations
    and the imposition of local foreign exchange controls will make it more difficult
    for the Banks borrowers to repay its loans on a timely basis.

Because
    the Bank makes U.S. dollar-denominated loans, it faces the risk that declines
    in the value of its borrowers local currencies will increase the cost,
    in local currency terms, to the Banks borrowers of acquiring dollars
    to repay loans, although, most of the Banks loans are export trade related
    and finance transactions which generate their own sources of U.S. dollars
    for repayment of these loans. The Bank also faces the risk that local country
    foreign exchange controls will restrict the ability of the Banks borrowers
    to acquire dollars to repay loans on a timely basis.



| | 13 | 
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The Bank faces competition
    from banks that offer similar financing services. The Bank also depends upon
    its competitors to fund and support part of its activities and if they cease
    to do so, it could reduce the Banks funding and lending activities.
    Banking business consolidation in Latin America has reduced the number of
    the Banks local customers.

Most
    of the competition the Bank faces in the trade financing area comes from international
    banks, mostly European and North American, which provide similar financing
    services to those provided by the Bank within the markets it serves. These
    banks have substantially greater resources and access to less expensive funding
    than is the case with the Bank, which puts the Bank at a competitive disadvantage.
    Due to recent economic developments in the Region, the Bank has fewer competitors
    because many international banks have reduced their exposure in the Region
    or have withdrawn from the Region altogether. Although some of these international
    banks compete directly with the Bank, they are also providers of funding for
    the Bank and represent a source of business. If these international banks
    ceased providing this funding to the Bank for competitive reasons, the Bank
    would be required to seek to replace this funding from other sources, which
    may not be available or would be available only at a substantially higher
    interest cost.

A
    substantial consolidation of the banking business in Latin America has occurred
    and is continuing. This has reduced the number of local banks in the Region,
    which historically have been the Banks primary customers for trade finance
    loans. Foreign banks operating locally are not always competitors and often,
    in fact, are important Bank clients. These changes in the business and in
    the markets of the Region could potentially place the Bank at a competitive
    disadvantage with respect to scale, resources and its ability to develop and
    diversify its sources of income.

# Item
  4. Information on the Company

# 4.A
  History and Development of the Company

The
    Bank, headquartered in Panama City, Panama, is a specialized multinational
    bank established to finance trade in the Region. The Bank was established
    pursuant to a May 1975 proposal of the XX Assembly of Governors of central
    banks in the Region, which recommended the creation of a multinational organization
    to increase the foreign trade financing capacity of the Region. The Bank was
    incorporated under the laws of Panama on November 30, 1977. Panama was selected
    as the location of the Banks headquarters because of the importance
    of the country as a banking center, the benefits of a fully dollarized economy,
    the absence of foreign exchange controls, the geographic location of Panama
    and the quality of its communications facilities. Under special legislation
    enacted in 1978, the Bank was granted certain privileges by the government
    of Panama, including an exemption from the payment of income taxes in Panama.
    The Bank is considered a regional risk rather than a Panamanian risk by the
    Federal Reserve Board. Management believes that this classification is based
    upon the Banks ownership structure and the absence of Panamanian concentration
    in the Banks loan portfolio. The central banks of France, the United
    Kingdom and Spain do not consider the Bank a Panamanian country risk. The
    Bank began business operations on January 2, 1979. The Bank commenced operations
    with stockholders equity of $25 million paid by 186 stockholders. The
    Banks stockholders equity was $584.3 million at December 31, 2003.

Central
    banks from 23 countries in the Region, or governmental financial institutions
    designated by such countries, own all of the Banks Class A shares, which
    at December 31, 2003 comprised 16.1% of the Banks common stock. 136
    commercial banks, mostly from the Region, own the Banks Class B shares,
    which at December 31, 2003 comprised 8.8% of the Banks common stock.
    The Banks Class E shares, which at December 31, 2003 comprised
    75.1% of its common stock, are listed on the New York Stock Exchange. As of
    December 31, 2003, the composition of the Board of Directors was as follows:
    three Directors representing holders of the Class A common shares; two Directors
    representing holders of the Class B common shares; three



| | 14 | 
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Directors representing
    holders of the Class E common shares; and two Directors representing all classes
    of common shares. On January 2, 2004, the two Board positions held by representatives
    of the Banks Class B shares were forfeited to the Class E shareholders
    under the Banks Articles of Incorporation because the percentage of
    Class B shares fell below 10% of the Banks total outstanding shares
    of common stock.

The
    Bank is principally engaged in providing short-term financing to selected
    commercial banks in the Region, which in turn lend to businesses primarily
    engaged in foreign trade and to state and private institutions. During 2003,
    the Bank provided financing to 38 of its 136 Class B shareholder commercial
    banks, one of its Class A shareholder central banks and 83 non-stockholder
    institutions. These non-stockholder institutions consisted of 37 private commercial
    banks, three state-owned commercial banks, 25 private corporations, 12 state-owned
    export organizations, four governments, one multilateral bank, and one private
    investment fund. During 2003, 46.8% of the aggregate principal amount of loans
    extended by the Bank was made to stockholder commercial banks, 1.9% was made
    to stockholder central banks and 51.4% was made to non-stockholder institutions.
    The geographical composition (excluding the non-accruing portfolio in Argentina)
    of the Banks net credit portfolio by type of client and purpose as of
    December 31, 2003 was as follows:

|         
|---------
|
|         
|Banks    
|Other    
|         
|Trade    
|Non-Trade
|         

|(*) | Other consists of
        reverse repurchase agreements classified as U.S. country risk of $132
        million and guarantees $7 million issued to a multilateral bank in Honduras.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
    July 2002, the Banks Board of Directors and management decided to focus
    the Banks business activities on providing short-term trade financing
    to banks and to reduce its non-trade lending activities with non-bank private
    entities, which primarily consist of private corporations. Loans to these
    entities previously were made primarily through co-financings, loan syndications
    and participations with other banks and generally involved medium-term, rather
    than short-term, loans that were not extended in connection with specific
    foreign trade transactions. In December 2002, the Banks Board of Directors
    amended the Banks by-laws to formalize this decision to focus on short-term
    trade financing to banks. This reflected the Banks desire, in view of
    the Banks weakened financial condition, to avoid higher risk, longer
    term loans to non-bank private entities which are not supervised by local
    bank regulatory authorities and do not have access to a lender of last resort,
    such as a central bank, in case of financial problems. Total loans outstanding
    to non-bank private entities at December 31, 2003 constituted 17.2% of the
    Banks total loans compared to 22.8% at December 31, 2002 and 22.5% at
    December 31, 2001.

The
    majority of the Banks short-term loans (defined as loans with an original
    maturity of less than one year) are extended in connection with specific foreign
    trade transactions that have been identified by the Bank. During 2003, the
    Bank extended $2,982.1 million of short-term loans, which represented 98.9%
    of the total loans extended by the Bank during that period. Of these loans,
    69.2% in principal amount were made to commercial banks, 4.8% were made to
    central banks, 3.2% were made to private corporations and 22.7% were made
    to state-owned exporting organizations.

The
    Bank has reduced its medium-term lending activity in connection with its decision
    to focus on providing short-term trade financing. During 2003, the Bank extended
    only $34.6 million of medium-term loans (defined as loans with an original
    maturity of more than one year), representing 1.1% of the total loans made
    by the Bank during that period. During 2002, the Bank extended $62.5 million
    of medium-term loans, representing



| | 15 | 
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2.9% of the total loans
    made by the Bank during that period. These loans generally had maturities
    ranging from 1 to 5 years and were made for the purpose of financing the export-related
    operations of the borrowers, and not specific foreign trade transactions.
    In 2001, the Bank extended $1,027.5 million of medium-term loans representing
    15.4% of total loans made during that period.

The
    Banks lending activities are funded by inter-bank deposits, primarily
    from central banks and financial institutions in the Region, by short-term
    and medium-term borrowings and by floating and fixed rate placements made
    with financial institutions and investors in Japan, Europe and North America.
    The Bank does not provide retail-banking services to the general public such
    as retail savings accounts or checking accounts and does not take retail deposits.

Banco
    Latinoamericano de Exportaciones, S.A. (in its individual capacity, BLADEX
    Panama) has two primary subsidiaries: Banco Latinoamericano de Exportaciones,
    Limited (BLADEX) (BLADEX Cayman) and BLADEX Representacao Ltda.
    BLADEX Cayman, which is a wholly owned subsidiary, was incorporated under
    the laws of the Cayman Islands (B.W.I.) (the Cayman Islands) on
    September 8, 1987. BLADEX Representacao Ltda., which was incorporated under
    the laws of Brazil on January 7, 2000, was established to operate the Banks
    representative office in Brazil. BLADEX Representacao Ltda. is 99.999% owned
    by BLADEX Panama and 0.001% owned by BLADEX Cayman.

The
    Bank has an agency in the State of New York (the New York Agency),
    which began business operations on March 27, 1989. The New York Agency is
    principally engaged in obtaining inter-bank deposits and short-term borrowings
    to finance the Banks short-term investments and foreign trade loans.
    As of December 31, 2002, the Banks operations in New York City were
    located at 708 Third Avenue, 16th Floor, New York, New York 10017. The Bank
    also has representative offices in Buenos Aires, Argentina and Mexico City,
    Mexico.

At
    December 31, 2003, BLADEX Cayman and the New York Agency held $513.5 million
    and $148.1 million in assets, respectively.

4.B
  Business Overview

Overview

BLADEX
    is a multinational bank originally established by the central banks of Latin
    American and Caribbean countries to promote trade finance in the Region. The
    Banks mission is to channel capital flows to the Region in the form
    of value-added trade finance solutions, which contribute to the economic development
    of the Region. The Banks business focus is trade finance services. Historically,
    trade finance has had an attractive risk / reward relationship. Another characteristic
    of the trade finance business is that it has commodity features and economic
    cycles affect the business. The Banks management believes that the basics
    of success of this business are the following:

| |  |  | Trade finance is a volume driven business, thus
        it is important to have a strong client franchise.
| | - |  | ----------------------------------------------------------------------------------------------------------

| |  |  | Low financing and operating costs.
| | - |  | ----------------------------------

| |  |  | High credit quality.
| | - |  | --------------------

| |  |  | Optimal capital structure.
| | - |  | --------------------------

All
    of the Banks lending activities are conducted with borrowers in the
    Region. During the 1980s, many of the countries in the Region experienced
    severe economic difficulties, including periods of slow or negative growth,
    large government budget deficits, high inflation, currency devaluations and
    unavailability of foreign exchange, including U.S. dollars. As a result, many
    governments and public and private institutions in the Region were unable
    to make interest and principal payments on their external debt. Much of the
    external debt of the Region was restructured to provide for extensions of
    repayment schedules, grace periods during which payments



| | 16 | 
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of principal were suspended
    and, in certain cases, reduced rates of interest. Short-term trade debt was
    generally exempt from such restructuring and generally the countries in the
    Region negotiated directly with the Bank concerning the Banks loans
    and generally granted the Bank special recognition with respect to debt restructuring.

The
    Banks preferred creditor status in Argentina, confirmed by the Central
    Bank of Argentina at the end of February 2002, exempts the Bank from limitations
    on the convertibility and transfer abroad of U.S. dollars for payment of external
    obligations. This preferred status contributed positively to the on-going
    efforts of the Banks collection program. Even with the benefit of this
    status, given the continued severity of the Argentine crisis, the Bank has
    had to renegotiate and restructure loans, and could face write-offs related
    to its Argentine portfolio.

Until
    the recent financial crises in Argentina, which has been unprecedented in
    its depth and severity, the Banks financial condition was not, as a
    general matter, materially adversely affected by economic difficulties affecting
    countries in the Region. During the 1990s, these difficulties included
    some of the following events. The financial markets in the Region were subject
    to volatility in December 1994 as a result of political and economic developments
    in Mexico, including the devaluation of the Mexican peso, which affected other
    countries in the Region. In early 1995, the banking system in Argentina experienced
    a sharp decrease in deposits, high interbank interest rates, an outflow of
    hard-currency reserves and several bank failures. Additionally, in Brazil,
    the banking system also experienced difficulties as a result of the economic
    crisis in Mexico. In 1997, the turmoil caused by the Asian collapse of currency
    and capital markets had a negative effect on the ability of issuers in the
    Region to raise debt and equity capital in international markets. In October
    1998, as a result of the Russian financial crisis, the Central Bank of Brazil
    was forced to increase internal interest rates in order to stop the flight
    of capital. This increase coincided with the price of commodities (major export
    products in the Region) reaching a low point, which increased the current
    account deficit and put more pressure on currencies. Because of fear of inflation,
    Latin American countries also raised their interest rates, causing the recession
    to become more pronounced in 1999. These developments during the 1990s
    did not, as a general matter, have a material impact on the timely repayment
    of interest or principal on the Banks loans to banks in the Region.

Developments
  During 2002 and 2003

The
    operating results reported for the year ended December 31, 2003 reflect the
    substantial progress the Bank has made in addressing the adverse effects of
    the Argentine crisis experienced by the Bank in 2002.

Adverse Developments
    During 2002

As
    a result of the $278.8 million additional provision taken during 2002 for
    possible credit losses and the $44.3 million of impairment losses on securities,
    both mostly relating to the Banks Argentine portfolio, coupled with
    a decline in net interest income from $117.7 million in 2001 to $64.8 million
    in 2002, the Bank reported a net loss for the year of $268.8 million. The
    resulting reduction in the Banks capital base, along with the increased
    risk perception in the Region, lead to the contraction of the Banks
    credit portfolio from $6.4 billion at December 31, 2001 to $3.3 billion at
    December 31, 2002, a decline of 48.6%. For a detailed explanation of the reasons
    why the Bank reduced its credit portfolio and how this was accomplished, see
    the first paragraph under Business Overview-Credit Portfolio By Country.
    The increased risk perception in the Region contributed to the contraction
    of the Banks credit portfolio and to the reduction in the availability
    to the Bank of funding for its credit portfolio. In addition, the Bank reduced
    its credit portfolio to reflect the reduced amount of stockholders equity,
    after the substantial provisioning made with respect to the Argentine portfolio.

The
    deterioration of the Banks Argentine credit portfolio resulted in substantially
    that entire Argentine credit portfolio being classified as impaired during
    2002. This resulted in a dramatic increase in the percentage of the Banks
    total credit portfolio represented by impaired assets and contingencies from
    1.7% at December 31, 2001 to 23.4% at December 31, 2002. In addition, at December
    31, 2002, 59.2% of the Banks credit portfolio was outstanding in Argentina
    and Brazil.



| | 17 | 
| | -- | 

---



Even
    though the Bank reported a $268.8 million net loss for 2002 as a result of
    the establishment of the additional provisions and the impairment losses,
    the Bank recorded net income for the third and fourth quarters of 2002 of
    $15.8 million and $15.0 million, respectively.

At
    January 1, 2002, the Banks credit portfolio in Argentina was $1.1 billion.
    During the first half of the year, the countrys economic condition became
    critical. This coincided with multilateral agencies insisting on the implementation
    of needed reforms as a precondition to providing support to Argentina. Those
    reforms were not forthcoming, and the situation deteriorated to the point
    where some of the Banks borrowers were unable to continue servicing
    their obligations.

The
    problems in Argentina quickly escalated into a full-scale political and economic
    crisis, which resulted in the default by the Argentine government on more
    than $50 billion of sovereign debt. Efforts by the Argentine government to
    contain the situation were followed by civil unrest and riots and a succession
    of government collapses and resignations, which added to the uncertainty.
    To attempt to stem the crisis, the Argentine government abandoned its currency
    board arrangement, which had maintained the value of the Argentine peso at
    one dollar. This resulted in an immediate devaluation of the Argentine peso,
    which lost 70% of its value compared to the U.S. dollar during 2002. Argentinas
    gross domestic product declined by approximately 11% during 2002 and the economy
    experienced an inflation rate of over 40 %.

As
    mentioned above, the deterioration of the Argentine economy made it more difficult
    for many of the Banks Argentine obligors to repay their loans on schedule. 
    Also, although some seemingly had resources to meet obligations, they suspended
    payments because of uncertainty and disruption caused by the crisis. This
    resulted in substantially all of these loans being treated as impaired assets
    and required the Bank to make large additional provisions for loan losses
    and incur impairment losses on securities during 2002.

In
    addition to the events in Argentina, economic and political developments in
    other Latin American countries, particularly Brazil and Venezuela, contributed
    to a dramatic escalation in risk perception throughout Latin America, which
    was accompanied by a decrease in the availability of credit and investment
    in the Region. This affected the Banks funding activity by making it
    more difficult for the Bank to obtain the funding for its credit portfolio
    and by increasing the interest costs for the Bank of borrowing funds or obtaining
    deposits. In Brazil, investors became increasingly uneasy in the uncertain
    political environment leading up to the election at the end of October 2002
    of Luiz Inácio Lula da Silva. The election was preceded by a rapid decline
    in the value of Brazils currency and speculation about its ability to
    service its approximately $239 billion of public debt, much of which must
    be refinanced in the next several years. These developments in Brazil contributed
    to the increased risk perception regarding Latin America and thus the decline
    in funding available to the Bank. In addition, one of the Banks rating
    agencies expressed concern regarding the size of the Banks credit portfolio
    in Brazil given the increased risks of loans in that country. In response,
    the Bank acted to reduce its credit portfolio in Brazil during 2002 from $2,489.9
    million at December 31, 2001 to $1,183.1 million at December 31, 2002. In
    Venezuela, broad-based discontent with the policies of the current Venezuelan
    government produced a countrywide strike that seriously disrupted economic
    activity in Venezuela and curtailed the production and export of oil, the
    major source of Venezuelas foreign exchange. In addition, other countries
    in Latin America, including Colombia, Bolivia and Ecuador were facing difficult
    economic and political circumstances that contributed to an increased risk
    perception.

Response
    to the Crisis and Positive Developments During 2003

The
    Banks immediate response to these unfolding events was to take actions
    to preserve capital and increase liquidity. The suspension of the Banks
    common share dividend was only one of the actions taken in this regard.



| | 18 | 
| | -- | 

---



Facing
    an environment of continuing uncertainty and economic turmoil, the Banks
    Board of Directors and management significantly increased provisions for credit
    losses associated with the Banks Argentine portfolio in the context
    of a plan to address five specific challenges facing the Bank:

| |  |  | Reducing credit risk, through reductions in the
      credit portfolio, particularly in Argentina, but also in other countries
| | - |  | ------------------------------------------------------------------------------------------------------------------------------

| |  |  | Maintaining a strong and stable liquidity position
| | - |  | --------------------------------------------------

| |  |  | Returning the Bank to profitability
| | - |  | -----------------------------------

| |  |  | Recapitalizing the Bank
| | - |  | -----------------------

| |  |  | Developing a new medium-term strategy for the
        Bank in light of new trends and the economic challenges facing the Region
| | - |  | -------------------------------------------------------------------------------------------------------------------------------

In
    spite of a difficult environment, the Banks efforts at reducing its
    risk in Argentina, coupled with the benefit of its preferred creditor status,
    yielded encouraging results. During 2002 and 2003, the Bank reduced its credit
    exposure in Argentina by $340.4 million and $338.9 million, respectively.
    The Bank collected all but $5.9 million or 13.4% in interest due and payable
    on Argentine credit obligations in 2002, and $1.1 million or 4.2% in 2003.
    Even though the Bank was able to reduce its credit exposure in Argentina,
    the percentage of the Banks total credit portfolio outstanding in Argentina
    increased from 17.3% at December 31, 2001 to 23.4 % at December 31, 2002 as
    a result of the fact that the Banks total credit portfolio declined
    by a greater percentage than the Banks credit portfolio in Argentina.
    During 2003, the Bank was able to reduce its credit exposure in Argentina
    as a percentage of its total credit portfolio to 15.3% at December 31, 2003.
    The $340.4 million reduction in the Banks credit portfolio in Argentina
    in 2002 was achieved through $263.6 million of loan repayments net of new
    disbursements, $24.9 million of expirations of contingencies, $19.7 million
    of loans charged off and $32.2 million from changes in estimated fair value
    adjustments on securities. As a result, the Bank incurred aggregate charges
    of $63.9 million (representing loans charged off of $19.7 million and impairment
    loss on securities of $44.3 million) in connection with the reduction. The
    $338.9 million reduction in 2003 was due to: (i) the sale of Argentine credits
    with a book value of $254.3 million (face value of $308.0 million), of which
    $108.8 million were charged off against the allowance for loan losses; (ii)
    net principal collections for $68.8 million; (iii) additional loan charge
    offs (not related to the sale of loans) in the amount of $28.4 million; (iv)
    an $8.2 million increase in the outstanding balance due to changes in the
    fair market value adjustments of investment securities; and (v) a $4.4 million
    increase in the outstanding balance due to revaluation of foreign currency
    exchange (mostly related to letter of credit acceptances in Euros for 21.4
    million). The Banks strategic approach to the difficult situation of
    its Argentine portfolio, combined with the strength of its relationships,
    allowed the Bank to restructure 80% of its loans in the country as of December
    31, 2003, thereby improving its financial prospects, while contributing to
    its clients efforts to gradually resume normal operations. In
    addition, where appropriate, the Bank sold parts of the portfolio. As a result,
    the Bank believes that the remaining $222.2 million net exposure in Argentina,
    as of March 31, 2004, does not represent a significant risk to the financial
    viability of the Bank.

In
    addition to managing credit risk in a particularly challenging environment,
    the Bank had to adjust to a general liquidity shortage in Latin America. In
    2002, credit flows to the Region began to decrease significantly. Many banks
    in both the United States and Europe, the traditional sources of credit facilities
    for Latin America, faced credit, trading and/or profitability difficulties
    in their home markets, which forced them to focus their resources on their
    core franchises. Under the circumstances, these banks turned more risk averse
    and many credit facilities to Latin American borrowers were sharply reduced.
    As a result, the Banks funding became more scarce and expensive. Risk
    perceptions during 2003 improved for the Region following positive political
    developments in Brazil and the rapid increase in world commodity prices. This,
    together with the Banks improved performance, had a positive impact
    upon the Banks funding, increasing the availability of funds and reducing
    the interest cost of borrowing funds and obtaining deposits.

As a result of
the Banks lower credit ratings and the need for liquidity on the part of
some of its depositors, deposits fell in the first half of 2002 and were down
by $1,019.4 million to $552.0 million at year-end.



| | 19 | 
| | -- | 

---



Approximately 62.7% of
    this reduction in deposits represented deposits withdrawn by central banks
    of countries in the Region and approximately 39.2% represented deposits withdrawn
    by commercial banks in the Region. The generally increased cost of funds was
    offset by higher lending margins. During 2003, the perception of the decline
    in risk increased the availability of liquidity in Latin America and this
    resulted in a strong increase in cash flows for the Region. As a result, the
    Banks funding became more plentiful and less expensive. During July
    and August of 2003, the major credit rating agencies reviewed the Banks
    credit ratings, following the Banks successful recapitalization program,
    which increased its capital base by $147.0 million. As of the date of this
    report, the Banks ratings are investment-grade (BBB-/Baa3) and the ratings
    outlook from all three rating agencies is stable, reflecting an upgrade by
    Fitch from non-investment grade and a change from a negative outlook by Moodys
    and Standard & Poors. During 2003, the deposit client base started
    to increase following the successful recapitalization program, the upgrade
    by Fitch and the improved environment. Overall deposits increased by 27.4%
    from $552.0 million at December 31, 2002 to $703.0 million at December 31,
    2003 an increase of $151.0 million.

Adequate
    liquidity provides support and comfort to the Banks creditors. The Bank
    was able to begin to reduce its liquidity levels following the recapitalization
    at the end of June 2003, while still maintaining a healthy net cash position
    throughout 2003. Liquidity is being managed in a conservative fashion and
    the Banks cash position was $252.6 million at December 31, 2003, representing
    a 35.9% of the Banks total deposit base and 9.9% of assets.

During
    2002, the Bank implemented a significant cost reduction program, which by
    the fourth quarter of 2002 resulted in a decline in the Banks operating
    expenses (excluding one-time items) of approximately 20% compared to the same
    period in 2001. During 2003, the Bank increased its operating expenses by
    approximately 17.1%, compared to the same period in 2002, mainly due to provisions
    for bonuses to the employees, consulting fees related to information technology
    projects and systems security, and higher insurance costs.

The
    Bank achieved record net income of $111.5 million for 2003, compared to a
    $268.8 million loss in 2002. The 2003 results reflected renewed growth in
    the Banks core business areas, as well as the successful management
    of its Argentine portfolio, which included the sale, and partial payment,
    of Argentine loans, which generated reversals of the allowance for loan losses.
    Return on equity was 23.9% for 2003, which was achieved working off a particularly
    strong capitalization level.

In
    order to address the Banks weakened capital ratios and the risk that
    Moodys and Standard and Poors would further reduce the Banks
    credit ratings to below investment grade, the Bank initiated and completed
    in June 2003 a highly successful recapitalization as a result of which the
    Bank raised $147.0 million of additional Tier 1 equity capital through the
    sale of 22 million shares in a rights offering to the Banks existing
    shareholders. As a result of this recapitalization, the Banks Tier 1
    and Tier 2 equity capital ratios at December 31, 2003 were 35.4% and 36.7%.
    The successful completion of the recapitalization, the continued reduction
    of the Banks credit exposure in Argentina, including the disposition
    during 2003 of $308.0 million in face value of Argentine loans and debt securities,
    and the gradual improvement of economic conditions in Argentina and other
    countries in Latin America resulted in Fitch raising the Banks credit
    ratings to BBB-, an investment grade rating. All of the Banks credit
    ratings are now investment grade with a stable outlook.

Institutionally,
    the Banks business focus remains on services, products, clients and
    transactions linked to foreign trade. The Bank believes that its competitive
    advantages in the trade finance related business are both structural and operational.
    The structural advantage is based on the Banks unique mission, multilateral
    character, shareholder composition, and proven commitment to its clients and
    to Latin America. The Banks operational advantages are based on its
    technical expertise, regional know-how, management excellence, transparency,
    and first-rate corporate governance. Part of the Banks tactical approach
    to leveraging its competitive advantages and becoming a complete trade services
    solution for its clients entails the deployment of new products that the Bank
    believes will increase, diversify, and stabilize its revenue stream. Basic
    to this approach is to limit the cost and execution risk of trade finance
    transactions through the use of strategic alliances with proven providers.



| | 20 | 
| | -- | 

---



In
    July 2003, the Bank and Bank of America Corporation completed a strategic
    alliance that offers Bank of Americas U.S. Dollar clearing services
    to the Banks clients in the Latin America and Caribbean region. This
    alliance offers an opportunity to combine the Banks reliable trade finance
    capabilities with Bank of Americas widely recognized product excellence
    in clearing services.

In
    January 2004, the Bank and Trade Source International (TSI) completed
    a strategic alliance that offers the Banks clients TSIs suite
    of global trade finance services, based on TSIs international expertise
    in export credit agency and other trade-specific financial structures. The
    services include creating and implementing innovative financing and payment
    solutions for trade-related structured transactions. As part of the Banks
    strategy of increasing the scope of trade finance products through strategic
    alliances, TSI affords the Bank the capability of deploying first-rate export
    credit agency structures. The Banks goal is to become the most comprehensive
    trade finance financial institution in Latin America, while minimizing the
    execution and investment risk.

With
    regard to the Argentine portfolio, the Bank will continue its efforts to restructure
    the remaining loan portfolio and may consider additional asset sales if prices
    are deemed attractive.

Business
    Strategy for 2004

During
    2004, several free trade treaty initiatives involving Latin America are expected
    to be concluded, which stimulate foreign trade in the Region. This would provide
    important business opportunities for the Bank.

The
    Banks focus in 2004 will be the following:

| |  |  | Continue increasing trade finance balances.
| | - |  | -------------------------------------------

| |  |  | Maximize the value of the Argentine portfolio.
| | - |  | ----------------------------------------------

| |  |  | Collect the remaining medium-term portfolio.
| | - |  | --------------------------------------------

| |  |  | Strengthen the management team.
| | - |  | -------------------------------

| |  |  | Diversify revenue sources.
| | - |  | --------------------------

| |  |  | Further improve the BLADEX brand.
| | - |  | ---------------------------------

| |  |  | Simplify internal processes and further improve
        efficiency.
| | - |  | -------------------------------------------------------------------

The
    Banks strategic focus is centered on supporting its clients full
    range of financial services needs arising in connection with their foreign
    trade transactions into and out of Latin America. Within this definition of
    the scope of its business, the Bank intends to achieve undisputed market leadership
    and pre-eminence, thus attracting and retaining the best people in the business,
    optimizing business origination, lowering its cost of funds, maximizing the
    price of its stock, and realizing all other advantages afforded by the market
    to industry leaders. Tactics to achieve the Banks objective are currently
    being deployed on five relevant fronts:

Organizational
    Structure and Human Resources

| |  | The Bank has decided to domicile the
        management of its commercial (business) operations in the United States.
        The Bank believes that this decision will afford it access to a deeper
        pool of skilled people, will afford it improved Latin American business
        origination in the U.S., and will keep it in closer contact with existing
        and potential business partners (Bank of America and TSI), and other constituencies
        such as shareholders, rating agencies, equity analysts and regulators.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Consistent with this decision, the
        Bank placed Mr. Rubens Amaral, its new Head of Commercial Operations hired
        on March 1, 2004, in the Banks Agency in New York City. Mr. Amaral
        is charged with responsibility for executing the Banks business
        strategy, and managing the Banks client and product sales force
        in the U.S., Panama, and the Representative Offices in Mexico, Argentina,
        and Brazil.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 21 | 
| | -- | 

---





| |  | Mr. Amaral has already started the
        process of upgrading the quality of the sales force, and shifting it to
        a consolidated U.S. location.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

Clients

| |  | The Bank continues placing emphasis
        on working with banks and a few, carefully selected strategic corporations
        in industries it knows well as its core clients. The Bank intends to expand
        the number of banks it works with, as it develops fee products in demand
        by the mediumsized segment of the market, and as it expands its
        presence in some of the smaller countries in the Region.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The number of corporate clients is
        also expected to increase as a result of co-financing transactions structured
        with its client banks, and as it expands structured trade transactions
        originated in the U.S.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Products

| |  | Product development is being conducted
        consistent with the objective of providing support across the entire range
        of financial service needs implied by trade transactions. From a financial
        perspective, the new products will provide the Bank with fee income, thus
        increasing return on asset levels, and providing stability to the overall
        revenue stream. A new Senior Product Manager has been hired and is expected
        to begin working on June 1, 2004 to lead this function (under Mr. Amarals
        supervision).
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The tactical approach to product development
        calls for making use of strategic partnerships wherever doing so provides
        the Bank with economies of scale, and where the Bank can leverage of its
        partners expertise. In the Banks view, the use of strategic
        partnerships minimizes execution risk, deployment costs, and time-to-market.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Brand Management

It
    is the Banks view that the management of the Bank brand could
    result in additional value being developed for the Bank. Consistent with this
    view, the Bank has conducted a branding study to determine the strengths and
    weaknesses of its positioning in the market, and developed a plan to leverage
    these strengths and address these weaknesses. Results of the project will
    start becoming apparent to the market in the third quarter of 2004.

Balance Sheet
    Management

| |  | Three aspects of the management of
        the balance sheet are being given special attention:
|- |  | -----------------------------------------------------------------------------------------------

| |  | Credit portfolio diversification is
        increasingly being driven by risk-weighted asset considerations, as opposed
        to absolute, nominal exposure amounts. The Bank believes that a risk-weighted
        approach to portfolio diversification results in better decision-making,
        as the analysis addresses not only exposure amounts, but also makes critically
        important differentiations among different types of risks. With regard
        to the Argentine portfolio, the Bank will continue its efforts to restructure
        the remaining loan portfolio and could consider additional asset sales
        if prices are deemed attractive.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Liquidity management is being driven
        by the realities of the Banks renewed strong and well-diversified
        access to funding sources.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Capital management is being subject
        to dynamic, continuous analysis, as the Bank works at optimizing its capital
        structure, balancing risk, liquidity, and return considerations.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Lending
    Policies

The
    Banks Articles of Incorporation state that the Bank may not lend to
    an institution in a country in the Region unless the central bank or a designated
    government entity of that country is a holder of Class A shares of the Bank.
    It generally has been an operating policy of the Bank to extend credit directly
    to banks and state-owned



| | 22 | 
| | -- | 

---



export organizations within
    the Region. Until recently, the Bank also made a significant volume of loans
    to non-bank private entities, mostly through co-financing, loan syndications
    and participations with other banks. At December 31, 2003, total loans outstanding
    to non-bank private entities (excluding Argentina) constituted 13.2% of the
    Banks total loans. All credit requests from eligible borrowers are analyzed
    in the light of credit risk criteria, including economic and market conditions.
    The Bank maintains a consistent lending policy and applies the same credit
    criteria in evaluating the credit worthiness of all clients.

The
    Bank has 28 officers responsible for marketing the Banks financial products
    and services to existing and potential customers. This includes the personnel
    in its representative offices in Argentina, Brazil and Mexico, and the New
    York Agency.

The
    Bank finances export and import transactions for all types of goods and products,
    with the exception of the export or import of armaments, ammunition, military
    equipment, liquor, hallucinogenic drugs or narcotics that are not utilized
    for medical purposes, and any article whose trading is widely prohibited due
    to environmental hazards or limitations established by international agreements.
    Exports financed by the Bank are destined for buyers in countries both inside
    and outside the Region. In the same manner, imports financed by the Bank originate
    from sellers in countries both inside and outside the Region.

At
    regular intervals (at least once a year), the Bank conducts a credit review
    of each of its borrowers and of each country in the Region. The Banks
    credit review includes an analysis of the borrowers financial condition,
    trends in the borrowers financial condition, peer group comparisons,
    a review of credit references and a review of general economic conditions
    in the borrowers country of origin, and may include discussions with
    bank regulatory authorities in the borrowers country of origin. On the
    basis of its credit review, the Bank establishes credit limits for each country
    in the Region and for each of its borrowers. In order to prevent excessive
    concentration, the Banks policy has been that the outstanding credit
    portfolio in a given country could not exceed the lesser of (i) 40% of the
    total credit portfolio of the Bank, (ii) four times the Banks total
    capital (defined according to the Basle capital adequacy principles), and
    (iii) the country limit established by management and approved by the Board
    of Directors. As a result of the net loss due to the increase in the allowance
    for credit losses, the cap on country exposures at four times the Banks
    total capital (the then applicable limit) was temporarily exceeded during
    2002 in the case of Brazil. The Banks country limit allocations are
    currently under review and the Credit Policy and Risk Assessment Committee
    of the Board of Directors (the Board Credit Committee) has approved
    exceptions from the 40% limit in the case of Brazil, (the current applicable
    limit), subject to all transactions complying the Board approved country limit
    and other conditions.

Based
  on the criteria considered in the credit reviews and on any other information
  deemed relevant, borrowers are assigned risk ratings on a scale ranging from
  1 to 10, with ratings from 1 through 6
  considered normal and 7 (special mention) to 10 (loss)
  considered problem credits. These ratings are assigned at least once a year
  in the case of normal credits and whenever the credits are reviewed or circumstances
  warrant. Ratings ranging from 7 through 10 are reviewed
  at least quarterly. Credits more than 30 days overdue are rated 7
  or higher.

The
    Board of Directors approves all country credit limits based on management
    recommendations, along with targeted customers and risk profiles as to tenor
    and type of risk to be undertaken in a particular country. The Board of Directors
    reviews and approves the credit limits for each country in the Region at least
    once a year. The Board of Directors also reviews and monitors the credit portfolio
    of the Bank, including both impaired credits and non-impaired credits rated
    7 or higher, at least every quarter.

The
    Bank generally establishes lines of credit for each of its borrowers; however,
    the Bank is not obligated to lend under such lines of credit and must approve
    each lending transaction on a case-by-case basis. The Bank does not, as a
    general rule, publish or communicate its lending limits for countries in which
    it lends or its borrowers, but uses such limits internally as a credit risk
    management tool. Once a line of credit has been established, credit is generally
    extended after receipt of a request from the borrower for financing that is
    usually



| | 23 | 
| | -- | 

---



related to foreign trade.
    The pricing for such loans is determined in accordance with prevailing market
    conditions and the credit-worthiness of the borrower.

For
    existing borrowers, the Banks management has authority to approve credit
    lines up to the lending limit prescribed by Panamanian law (see RegulationPanamanian
    Law), provided that such credit lines comply with the country credit
    limits for the borrowers country of domicile as approved by the Board
    of Directors. Approved borrower lending limits are reported to the Board Credit
    Committee on a quarterly basis. As of December 31, 2003, the lending limit
    prescribed by Panamanian law for any one borrower amounted to approximately
    $175.5 million. The Banks management has recently been given authority
    to approve credit lines of up to the lending limit to the extent that the
    approved credit complies fully with the country limits and all conditions
    included therein. All credit lines must be approved by the head of Risk Management,
    who has right of veto, and the head of Credit and Marketing or Treasury, depending
    on the type of facility being reviewed, or their designees. The head of Risk
    Managements approval is required for all credit approvals, and the Chief
    Executive Officers approval is also required for all new clients and
    for exposures exceeding $30 million. The approval of credit lines for any
    credit classified as 7 (special mention) require approval by the
    Board Credit Committee. The Board Credit Committee also reviews the entire
    impaired portfolio, including all Argentine loans along with non-impaired
    credits rated 7 or higher on a quarterly basis.

As
    a result of the recent change in Managements authority to approve credit
    lines, the restrictions that client credit lines not exceed an amount ranging
    from 10% to 50% of the borrowers equity, depending on the type of borrower,
    credit-worthiness and term and nature of the transaction, and up to 5% of
    the Banks total outstanding credit portfolio were lifted and left to
    management, with decisions to be based on due consideration of all applicable
    factors. As a result of the Banks decision to increase its allowance
    for credit losses and to take a charge for impairment losses on securities
    in 2002 and the corresponding reduction in the Banks total assets and
    capital, the Bank exceeded the 30% lending limit prescribed by Panamanian
    law with respect to several borrowers. The Superintendency of Banks of Panama
    granted the Bank a waiver of this requirement in July of 2002 which allowed
    it one year to reduce its credits to non-Argentine borrowers to the 30% limit
    (which has been done), and an unspecified period to reduce its exposure to
    Argentine clients to the 30% limit, as market conditions allowed. At December
    31, 2003, the Bank was in full compliance with all regulatory limits. The
    Panamanian Banking Law also contains certain concentration limits, which are
    strictly adhered to by the Bank. See RegulationPanamanian
    Law.

The
    Banks loans are generally unsecured. However, in certain instances,
    based upon its credit review of the borrower and the economic and political
    situation and trends in the borrowers home country, the Bank has determined
    that the level of risk involved requires that a loan be secured by pledged
    deposits. The Bank has also in some instances either obtained an assignment
    of the trade related transaction documents and proceeds of the export transaction,
    such that the importer is obligated to make payments for the exported goods
    directly to the Bank, or obtained other appropriate collateral.

The
    Bank has developed credit information on its borrowers over an extended period
    of time. Many of the Banks borrowers have been customers and stockholders
    for periods of over ten years. At December 31, 2003, total non-trade-related
    loans amounted to $404.9 million or 21.6% of the Banks total loans (excluding
    Argentine loans).

In response to
developments that occurred in the Region in 2001 and 2002 and the effect of such
developments on the Bank, the Banks management decided to focus the Banks
business activities on providing short-term trade financing to banks. In addition,
the Banks Board of Directors in 2002 amended the Banks by-laws to
focus its business activities on providing trade related financing. This reflected
the Boards desire, in view of the Banks weakened financial condition,
to avoid higher risk, longer-term loans not tied to specific trade transactions.
At December 31, 2003, $692.9 million or 28.7% of the Banks total credit
portfolio (excluding Argentina) represented non-trade related credits. At that
date, $480.4 million or 69.3% of these non trade credits



| | 24 | 
| | -- | 

---



had a remaining term to
    maturity of less than one year, and $207.5 million or 30.0% had a remaining
    maturity of one year or greater and $5.0 million or 0.7% consisted of past
    due loans.

Credit
    Portfolio

The
    Banks credit portfolio consisting of loans, selected investment securities
    held to maturity and available for sale, securities purchased under agreements
    to resell, letters of credit, customers liabilities under acceptances,
    guarantees and credit commitments, declined from $6.4 billion at December
    31, 2001 to $3.3 billion at December 31, 2002 to $2.8 billion at December
    31, 2003. The decline in the credit portfolio resulted from managements
    decision to (i) maintain an adequate level of capitalization following Argentine
    credit loss provisions and charges, (ii) reduce credit exposure commensurate
    with increasing risk levels in some countries in the Region, and (iii) adapt
    the balance sheet to smaller funding levels. In 2002, $2.5 billion of the
    $3.1 billion reduction in the Banks credit portfolio was achieved through
    loan portfolio repayments from the Banks borrowers net of new disbursements,
    $548 million of the reduction resulted from expirations in contingencies,
    $20.6 million from loans charged-off, $28.2 million from the sale of loans
    and securities and $30.5 million from changes in estimated fair value adjustments
    on securities. Most of the loan reductions occurred in Brazil and Mexico.
    In 2003, the reduction in the Banks credit portfolio was mainly attributable
    to the sale of Argentine credits with a face value of $308.0 million, and
    the reduction of the Banks stock of non-trade medium-term credits.

The
    following tables set forth the distribution of the Banks credit portfolio,
    by product category and by country at December 31 of each year set forth below.
    Investment securities are considered part of the Banks credit portfolio
    (and therefore included in the chart below) when the acquisition of such securities
    is subject to the same lending policies, including credit approval criteria,
    as the rest of the credit portfolio. At December 31, 2003, 100% of the Banks
    investment securities were considered part of its credit portfolio. The value
    of all securities included in the following tables has been calculated using
    the estimated fair value of such securities.

|                           | At December 31,
|-------------------------- | ---------------
|
|
|Loans                      |                
|Investment securities (1)  |                
|Securities purchased under |                
|agreements to resell       |                
|                           |                
|Contingencies              |                
|                           |                
|Total                      |                
|                           |                

|1 | Investment securities
        consist of investment securities considered part of the Banks credit
        portfolio.
|- | ----------------------------------------------------------------------------------------------------------------------

|                   | At December 31,
|------------------ | ---------------
|
|
|Argentina          |                
|Bolivia            |                
|Brazil             |                
|Chile              |                
|Colombia           |                
|Costa Rica         |                
|Dominican Republic |                
|Ecuador            |                
|El Salvador        |                
|Guatemala          |                
|Honduras           |                
|Jamaica            |                
|Mexico             |                
|Nicaragua          |                
|Panama             |                



| | 25 | 
| | -- | 

---



|                  | At December 31,
|----------------- | ---------------
|
|
|Paraguay          |                
|Peru              |                
|Trinidad & Tobago |                
|Uruguay           |                
|Venezuela         |                
|Other             |                
|                  |                
|Total             |                
|                  |                

---

(1) At December
  31, 2001, 2002 and 2003, $291.9 million, $132.0 million and $132.0 million represented
  securities purchased under agreements to resell. At December 31, 2003, the remaining
  $7 million represented guarantees issued to a multilateral bank in Honduras.

A
    per country distribution of the maturity profile of the Banks medium-term
    exposure at December 31, 2003 is presented below:

|                   | At December 31,
|------------------ | ---------------
|
|
|Brazil             |                
|Colombia           |                
|Costa Rica         |                
|Dominican Republic |                
|El Salvador        |                
|Jamaica            |                
|Mexico             |                
|Nicaragua          |                
|Peru               |                
|Venezuela          |                
|                   |                
|Total              |                
|                   |                
|Percentage (%)     |                
|                   |                

At
    December 31, 2003, approximately $1,968.9 million, or 69.2%, of the Banks
    credit portfolio was outstanding to borrowers in the following four countries:
    Brazil ($1,153.9 million, or 40.5%); Argentina ($435.1 million, or 15.3%);
    Mexico ($246.6 million, or 8.7%); and Chile ($133.3 million, or 4.7%). In
    addition, at December 31, 2003, 21.2% of the Banks total credits were
    to 5 borrowers in Brazil and 7.8% of total credits were to 3 borrowers in
    Mexico.

Argentine
    Portfolio

The
    Banks net exposure in Argentina as of December 31, 2003 is presented
    in the following table:

|                                    
|------------------------------------
|
|                                    
|(In $ millions)                     
|                                    
|Nominal Value (gross portfolio)     
|Impairment loss                     
|                                    
|Credit Portfolio at Dec. 31, 2003   
|Specific allowance for credit losses
|Collateral (U.S. Treasury Strips)   
|                                    
|                                    
|Net Exposure at Dec. 31, 2003       
|                                    



| | 26 | 
| | -- | 

---



As
    of December 31, 2003, the Banks credit portfolio in Argentina amounted
    to $435.1 million, a reduction of $338.9 million, or 43.8%, compared to December
    31, 2002. This reduction was mainly due to the sale of Argentine assets with
    a book value of $254.3 million, the proceeds of which exceeded their carrying
    value (net of previously established loan loss allowances and fair value adjustments).
    The following table shows detailed information on these sales during 2003:

|                         
|-------------------------
|
|                         
|(In $ millions)          
|                         
|Principal (Nominal Value)
|Specific Credit Allowance
|Impairment losses        
|                         
|Net Carrying Value (A)   
|                         
|Sale proceeds (B)        
|                         
|Gains on sales (B-A)     
|                         

The
    Argentine portfolio distribution by industry type as of December 31, 2003
    was as follows:

|                                           
|-------------------------------------------
|
|                                           
|(In $ millions, except percentages)        
|                                           
|Non-Financial Entities                     
|Beverage                                   
|Telecommunications                         
|Food production                            
|Mining and oil and gas
      extraction    
|Primary metal manufacturing                
|Utilities                                  
|                                           
|Total
      Non-Financial Entities         
|                                           
|Financial Institutions                     
|Controlled subsidiaries
      of major US  
|and European
      Banks                   
|State owned banks guaranteed
      by third
|party paper                                
|State owned banks                          
|                                           
|Total
      Financial Institutions         
|                                           
|Total Argentine Credit Portfolio           
|                                           

During
    2003, the Bank worked with its Argentine clients to renegotiate and restructure
    their obligations. From this perspective, the composition and maturity profile
    of the Argentine credit portfolio as of December 31, 2003 was as follows:

|                                                               |  |      
|-------------------------------------------------------------- |  | -----
|                                                              
|
|Status                                                        
|                                                              
|Performing under original terms                                |  | $  36
|Restructured and performing under renegotiated
      terms     |  | 347  
|In negotiations to be restructured (current in
      interest) |  | 18   



| | 27 | 
| | -- | 

---





|                                         |  |     
|---------------------------------------- |  | ----
|                                        
|
|Status                                  
|                                        
|Not restructured and not paying interest |  | 34  
|                                        
|Total Argentine Credit Portfolio         |  | $435
|                                        

The
    portfolio of restructured and performing loans, under the renegotiated terms,
    has an average life of 2.3 years. No restructurings have involved discounts
    or losses of principal. Assets not restructured and not paying interest consist
    of obligations from three companies in the utilities sector.

Loan
    Portfolio

At
    December 31, 2003, the Banks total loans amounted to $2,275.0 million.
    Excluding $397.9 million of Argentine loans, 95.0% of the Banks remaining
    loan portfolio at that date was scheduled to mature within one year. At December 31,
    2003, net of allowance for loan losses and unearned income, the Banks
    loans equaled $2,046.4 million. The Bank services all loans in its loan portfolio
    except syndicated loans, which are serviced through agent banks that are generally
    appointed by the arrangers of the syndication.

At
    December 31, 2002, the Banks total loans amounted to $2,516.5 million.
    Excluding $694.0 million of Argentine loans, 80% of the Banks loan portfolio
    at that date was scheduled to mature within one year. At December 31,
    2002, net of allowance for loan losses and unearned income, the Banks
    total loans equaled $2,077.3 million.

The
    majority of the Banks short-term financing is extended in connection
    with specific foreign trade transactions that have been identified to the
    Bank.

Until
    2001, the Bank engaged in a significant volume of medium-term lending in which
    maturities generally ranged from one to five years. Medium-term loans were
    extended primarily to banks and to a lesser extent to state-owned and private
    corporations in the Region. At December 31, 2003, the Banks medium-term
    loans had an average term remaining to maturity of approximately 19 months.
    It has been the Banks policy to fund such medium-term lending primarily
    with medium-term liabilities and to limit such lending to between 2% (if the
    term to maturity is greater than five years) and 40% (if the term to maturity
    is between twelve and eighteen months) of its total credit portfolio, with
    additional percentage limitations (based on maturities) within that range,
    although the Banks lending limit structure is currently under review.
    At December 31, 2003, excluding Argentine loans, medium-term loans with a
    remaining maturity of one year or greater amounted to $93.9 million or
    5.0% of the Banks total loans.

Loans by
    Country

The
    following table sets forth the distribution of the Banks loans, including
    short-term loans, medium-term loans and long-term loans (defined as loans
    with an original maturity of over 5 years) by country at December 31 of each
    year set forth below:

|           | At December 31,
|---------- | ---------------
|
|
|Argentina  |                
|Bolivia    |                
|Brazil     |                
|Chile      |                
|Colombia   |                
|Costa Rica |                

| | 28 | 
| | -- | 

---



|                   | At December 31,
|------------------ | ---------------
|
|
|Dominican Republic |                
|Ecuador            |                
|El Salvador        |                
|Guatemala          |                
|Jamaica            |                
|Mexico             |                
|Nicaragua          |                
|Panama             |                
|Paraguay           |                
|Peru               |                
|Trinidad & Tobago  |                
|Uruguay            |                
|Venezuela          |                
|                   |                
|Total              |                
|                   |                

The
  above table does not include the Banks outstanding selected investment
  securities net of impairment loss on securities, estimated unrealized gain (loss)
  on impaired securities, premiums and discounts (which were purchased as part
  of its credit portfolio activity), securities purchased under agreements to
  resell, credit commitments, letter of credit confirmations, customer liabilities
  under bankers acceptances and guarantees, each issued to, or issued by,
  borrowers in the Region, which totaled $571.8 million at December 31, 2003.

Argentine
    loans decreased as a percentage of the Banks total loan portfolio from
    approximately 27.6% at December 31, 2002, to approximately 17.5% at December 31,
    2003. This decrease resulted from the fact that the Banks Argentine
    loan portfolio declined by approximately 42.7% during 2003 reflecting the
    ability of the Bank to sell Argentine obligations.

Loans by
    Type of Borrower

The
    following table sets forth the amounts of the Banks loans by type of
    borrower in the Region at December 31 of each year set forth below:

|                                    | At December 31,
|----------------------------------- | ---------------
|
|
|Private sector commercial banks     |                
|State-owned commercial banks        |                
|Central banks                       |                
|Sovereign debt                      |                
|State-owned exporting organizations |                
|Private corporations                |                
|                                    |                
|Total                               |                
|                                    |                

Securities
    Purchased under Agreements to Resell



| | 29 | 
| | -- | 

---



Investment
    Securities

The
    Banks investment securities consist of securities held to maturity and
    securities available for sale.

The
    following table sets forth information regarding the carrying value of the
    Banks investment securities portfolio at December 31 of each year set
    forth below. See also Operating and Financial Review and ProspectsChanges
    in Financial ConditionInvestment Securities.

|                                          | At December 31,
|----------------------------------------- | ---------------
|
|
|Securities Held to Maturity               |                
|Bonds                                     |                
|Floating
      rate notes                 |                
|Certificates
      of deposits            |                
|Treasury
      bills                      |                
|Impaired
      floating rate notes        |                
|                                          |                
|Total
      Securities Held to Maturity   |                
|                                          |                
|Securities Available for Sale             |                
|Bonds                                     |                
|Certificate
      of deposits             |                
|Impaired
      bonds                      |                
|                                          |                
|Total
      Securities Available for Sale |                
|                                          |                
|Total
      Investment Securities         |                
|                                          |                

At
    December 31, 2002 and 2003, the total carrying value of investment securities
    was net of estimated fair value adjustments on securities, including estimated
    unrealized gain (loss) on securities and impairment loss of $44.3 million
    and $1.0 million, respectively, which was charged to operations, resulting
    primarily from the impairment of Argentine securities that were originally
    purchased under the Banks credit portfolio lending policy. See Asset
    Quality and Impaired Assets.

During
    2002, the Bank reclassified securities held to maturity in the amount of $174.0
    million to securities available for sale, which, once reclassified, were recorded
    in the amount of $131.3 million, net of estimated fair value adjustments.
    This reclassification was required by the Panamanian Superintendency of Banks,
    which established a minimum credit rating for securities classified as held
    to maturity.

At
    December 31, 2003, 5.7% of the Banks investment portfolio (excluding
    Argentine investments) was scheduled to mature within one year and the Banks
    entire investment portfolio had a weighted average interest rate of 10.7%
    per annum.

Total
    Outstandings by Country

The
    following table sets forth the aggregate amount of the Banks cross-border
    outstandings, consisting of cash and due from banks, interest-earning deposits
    in other banks, selected investment securities net of impairment loss on securities,
    estimated unrealized gain (loss) on impaired securities, premiums and discounts
    (which were purchased as part of its credit portfolio activity), securities
    purchased under agreements to resell and loans, but not including contingencies
    (collectively Cross-Border Outstandings) at December 31 of each
    year set forth below:



| | 30 | 
| | -- | 

---





|                   | At December 31,
|------------------ | ---------------
|
|
|
|Argentina          |                
|Austria            |                
|Bahrain            |                
|Belgium            |                
|Bolivia            |                
|Brazil             |                
|Canada             |                
|Chile              |                
|Colombia           |                
|Costa Rica         |                
|Denmark            |                
|Dominican Republic |                
|Ecuador            |                
|El Salvador        |                
|Finland            |                
|France             |                
|Germany            |                
|Guatemala          |                
|Ireland            |                
|Italy              |                
|Jamaica            |                
|Japan              |                
|Mexico             |                
|Nicaragua          |                
|Panama             |                
|Peru               |                
|Portugal           |                
|Spain              |                
|Sweden             |                
|The Netherlands    |                
|Trinidad & Tobago  |                
|United Kingdom     |                
|United States      |                
|Venezuela          |                
|Other (1)          |                
|                   |                
|Total              |                
|                   |                

---

|(1) | Other
          consists of Cross-Border Outstandings to countries in which Cross-Border
          Outstandings did not exceed $10 million for any of the periods indicated
          above.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
    following table sets forth the amount of the Banks Cross-Border Outstandings
    by type of institution at December 31 of each year set forth below:

|                                    | At December 31,
|----------------------------------- | ---------------
|
|
|Private sector commercial banks     |                
|State-owned commercial banks        |                
|Central banks                       |                
|Sovereign debt                      |                
|State-owned exporting organizations |                



| | 31 | 
| | -- | 

---



|                     | At December 31,
|-------------------- | ---------------
|
|
|Private corporations |                
|                     |                
|Total                |                
|                     |                

Contingencies

Contingencies
    are considered part of the credit portfolio because the Bank applies the same
    credit standards used in its lending process in its evaluation of these instruments.
    At December 31, 2003, total contingencies amounted to $361.7 million, which
    represented 12.7% of the Banks total credit portfolio.

The
    Bank advises and confirms letters of credit to facilitate internal and external
    regional trade transactions. The Bank also issues stand-by letters of credit
    and in the past issued guarantees to provide coverage for country risk arising
    from the risk of convertibility and transferability of local currency of countries
    in the Region into hard currency. In a few cases, the Bank also issues stand-by
    letters of credit and guarantees to provide coverage for country risk arising
    from political risks, such as expropriation, nationalization, war and/or civil
    disturbances. At December 31, 2003, total stand-by letters of credit and guarantees
    representing country risk coverage amounted to $79.3 million with no Argentine
    country risk exposure.

The
    Bank also enters into credit commitments (defined as both non-binding and
    legally binding agreements to lend to a customer) in order to meet the financial
    needs of customers. Commitments generally have fixed expiration dates or other
    termination clauses and may require payment of a fee to the Bank. As some
    commitments expire without being drawn down, the total commitment amounts
    do not necessarily represent future cash requirements. See Note 18 to Consolidated
    Financial Statements.

Asset
    Quality

Although
    the Bank is exposed to the types of problems that have affected Argentina,
    the Bank attributes its overall asset quality (other than with respect to
    its Argentine portfolio) to the trade-related nature of its loan portfolio;
    the composition of its client base; the importance that governments and borrowers
    in the Region attach to maintaining their continuing access to trade financing;
    and the Banks strict adherence to commercial criteria in its credit
    activities. The Bank has developed an in-depth knowledge of and relationship
    with its client base throughout its 25 years of operations in the Region,
    which allows it to continue to further enhance its risk management process.
    Since the commencement of the Banks operations in 1979 through December
    31, 2003, the Bank has extended credit in the aggregate amount of $124.1 billion
    and has had charge-offs totaling $79.6 million.

The
    management and the Credit Policy and Risk Assessment Committee of the Board
    of Directors of the Bank periodically review a report of all loan delinquencies.
    The Banks collection policies include rapid internal notification of
    any delinquency and prompt initiation of collection efforts, usually with
    the involvement of senior management.

Impaired
    Assets and Contingencies

Loans
    are identified as impaired and placed on non-accrual status when any payment
    of principal or interest is over 90 days past due or if the Banks management
    determines that the ultimate collection of principal or interest is doubtful.
    In all cases, if a borrower has more than one loan outstanding under its line
    of credit with the Bank and any of its individual loans is placed on non-accrual
    status, the Bank places all outstanding loans to that borrower on non-accrual
    status. In the same manner, if a single note of a loan is placed on non-accrual
    status, the remaining notes under that loan are placed on non-accrual status
    as well. Securities that experience a decline in value, which is deemed other
    than temporary, are classified as impaired.



| | 32 | 
| | -- | 

---



Impaired
    assets and contingencies constituted 1.7%, 23.4%, and 17.0% (mostly Argentine
    assets and contingencies) of the total credit portfolio of the Bank at December
    31, 2001, 2002 and 2003, respectively. At December 31, 2003, all of the Banks
    credit exposure in Argentina was classified as impaired assets and all interest
    income on these items is accounted for on a cash basis. In addition, as of
    June 30, 2002, fees generated by contingencies in Argentina are accounted
    for on a cash basis.

The
    Banks Argentine credit portfolio at December 31, 2003 amounted to approximately
    $435.1 million, which represented a reduction of $338.9 million from December
    31, 2002. The Banks credit portfolio in Argentina at December 31, 2003
    consisted of $397.9 million of loans, $5.3 million of securities at estimated
    fair value (with a par value of $9.8 million) and $31.9 million of contingencies
    and was distributed as follows: state-owned banks (51.4%), subsidiaries of
    international banks (13.3%), multinational corporations (13.2%), local corporations
    (11.4%), and foreign state-owned corporations (10.7%). In addition, at December
    31, 2003, the Bank had $132.0 million of exposure under repurchase agreements
    with counterparties in Argentina, which were fully secured with U.S. Treasury
    securities, and consequently classified as a U.S. country risk. At December
    31, 2003, the Bank held no Argentine sovereign debt.

During
    2003, the Bank collected interest from Argentine borrowers of approximately
    $24.1 million. The ratio of interest collected from Argentine borrowers to
    total interest payments due and payable from these borrowers during 2003 was
    85.5%.

The
    Banks preferred creditor status, confirmed by the Central Bank of Argentina
    at the end of February 2002, exempts the Bank from limitations on the convertibility
    and transfer abroad of U.S. dollars for payment of external obligations. This
    preferred status contributed positively to the on-going efforts of the Banks
    collection program. Even with the benefit of this status, given the continued
    severity of the Argentine crisis, the Bank has had to renegotiate and restructure
    loans, and could face write-offs related to its Argentine portfolio.

The
    following table sets forth information regarding the Banks impaired
    assets and contingencies at the dates indicated below.

|                                                                    | At December 31,
|------------------------------------------------------------------- | ---------------
|
|
|Impaired loans                                                      |                
|Allocation from the allowance for                                   |                
|loan losses                                                         |                
|Impaired loans as a percentage                                      |                
|of total loans                                                      |                
|                                                                   
|Impaired contingencies                                              |                
|Allocation from the reserve for losses on off                       |                
|balance-sheet credit
      risks                                    |                
|Impaired contingencies as a percentage of total
      contingencies |                
|                                                                   
|Impaired securities (par value)                                     |                
|Estimated fair value adjustments on options                         |                
|and impaired securities                                             |                
|                                                                   
|Estimated fair value of impaired securities                         |                
|Impaired securities as a percentage of total                        |                
|securities (3)                                                      |                
|                                                                   
|Impaired assets as a percentage of                                  |                
|Total assets                                                        |                



| | 33 | 
| | -- | 

---



|                                                                 | At December 31,
|---------------------------------------------------------------- | ---------------
|
|
|Impaired assets and contingencies as a percentage
      of total |                
|credit portfolio (4)                                             |                

---

|(1) | Prior
          to the adoption of SFAS 133 in 2001, the estimated fair value adjustments
          of options were charged off against the allowance for losses on guarantees.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes
          impairment loss on securities, estimated unrealized gain (loss) on impaired
          securities, premiums and discounts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Total
          securities consist of investment securities considered part of the Banks
          credit portfolio.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(4) | The total
          credit portfolio consists of loans net of unearned income, fair value
          of investment securities, securities purchased under agreements to resell
          and contingencies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Impaired
    Loans

Total
    impaired loans were $444.9 million at December 31, 2003 compared to $691.5
    and $77.1 million at December 31, 2002 and 2001, respectively. At December
    31, 2003, the Banks entire $397.9 million loan portfolio in Argentina
    was classified as impaired assets and all interest income on these loans is
    accounted for on a cash basis.

The
    following table sets forth for the years ended December 31, 2001, 2002 and
    2003 the amount of impaired loans in the Banks loan portfolio, interest
    actually collected on these loans and thus included in income, interest which
    would have been recorded if the loans had not been classified as impaired
    and forgone interest revenue as a result of impaired loans.

|                                                                           | For the year ended December 31,
|-------------------------------------------------------------------------- | -------------------------------
|
|
|Impaired loans                                                             |                                
|                                                                           |                                
|Interest which would have been recorded                                    |                                
|if
      the loan had not been impaired                                    |                                
|Interest actually collected on impaired
      loans and included in income |                                
|                                                                           |                                
|Forgone interest revenue as a result                                       |                                
|of
      impaired loans                                                    |                                
|                                                                           |                                

Except
    as shown in the above table, management does not believe that there is a material
    amount of loans with respect to which it has serious doubts as to the ability
    of the borrowers to comply with the present loan repayment terms and which
    could result in such loans becoming non-accruing loans.

Loans
    are charged off when they are deemed uncollectible, after giving consideration
    to factors such as the customers financial condition and underlying
    collateral and guarantees, as well as general and industry economic conditions.
    Normally this takes place within 12 months of a loan being classified in the
    loss category, which is defined as a credit where recovery is
    deemed improbable, although there may still be relevant specific factors which
    could result in improved prospects, such as eventual capital injections and
    the outcome of liquidation proceedings.

Impaired
    Contingencies

Contingencies
    are identified as impaired and placed on non-accrual status when any payment
    of fees or commissions relating thereto is over 90 days past due or if the
    Banks management determines that the item may become payable by the
    Bank and ultimate collection of principal or interest is doubtful.



| | 34 | 
| | -- | 

---



At
    December 31, 2002, the Bank had identified contingencies with an Argentine
    company and two Argentine banks as impaired for a total of $45.4 million for
    which it provisioned $14.5 million. Of these, an $18 million contingency became
    a loan as part of a restructuring process during 2003. At December 31, 2003,
    the Bank maintained as impaired contingencies with one Argentine company and
    one Argentine bank for a total of $31.1 million for which it provisioned $20.5
    million. Except for these cases, management does not believe that there is
    a material amount of contingencies with respect to which it has serious doubts
    as to the ability of the obligors to comply with the present terms there under.

Impaired
    Securities

During
    2001, the Bank identified impaired securities with a par value of $50.4 million
    from two Argentine banks and charged an impairment loss of $40.4 million to
    earnings relating thereto. During 2002, the Bank identified impaired securities
    with a par value of $107.2 million and charged an impairment loss of $44.3.
    During 2003, the Bank identified impaired securities with a par value of $9.8
    million and charged an impairment loss of $1.0 million. At December 31, 2003,
    the Bank held impaired securities with a total carrying value of $5.3 million
    which represents the $9.8 million par value of these securities net of estimated
    unrealized gross gain of $2.4 million, cumulative impairment loss charged
    to operations of $(2.3) million and amortization of premiums and accumulated
    provision for loan restructured as investment of $(4.7) million.

Allowance
    for Credit Losses

The
    allowance for credit losses (which includes the allowance for loan losses
    and the reserve for losses on off-balance sheet credit risk) covers the credit
    risk on loans and contingencies. This allowance for credit losses is maintained
    at a level that is adequate in managements judgment to provide for estimated
    probable credit losses inherent in various on and off-balance sheet financial
    instruments.

The
    allowance for credit losses consists of two elements. One element represents
    the aggregate of estimated losses on the Banks impaired loans and contingencies.
    The second element represents a general allowance for probable losses on the
    entire credit portfolio of the Bank net of impaired credits.

The
    Bank calculates an estimated loss for each impaired loan and contingency by
    considering a number of variables including, as appropriate, the secondary
    market value of the credit, the fair market value of any collateral and the
    present value of the expected future cash flows from the credit item discounted
    at the items contractual effective rate. The sum of the estimated losses
    for each impaired credit item constitutes this element of the allowance.

At
    December 31, 2003, the Banks total allowance for credit losses amounted
    to $258.3 million, of which $195.4 million represented estimated specific
    allowances related to specific Argentine impaired loans and contingencies,
    and $16.3 million represented an estimated specific allowance related to a
    specific Brazilian impaired loan.

On
    a quarterly basis, the Bank estimates probable credit losses on the balance
    of its loans and contingencies using a provisioning matrix model which differentiates
    risk into three categories: country risk, borrower risk and transaction type
    risk, and aggregates the sum of these factors. For each of the three categories,
    the Bank determines a percentage probability of loss with respect to each
    of its credits. These percentage loss probabilities are then aggregated for
    each credit with the weightings for the three risk categories being determined
    based on a number of factors, with the rating of the country in which the
    borrower is located, borrower risks and transaction risks receiving nearly
    equal weight. As the country rating declines, the weighting of the country
    risk factor increases up to a maximum of 45%. To determine the probability
    of loss due to country risk, the Bank uses sovereign ratings of well-known
    independent rating agencies. For the borrower risk category, the Bank uses
    its own numerical credit ratings, which it converts to the rating agency equivalent
    in order to apply the probability of default matrix. The Banks rating
    system closely follows the probability of default matrix of a well-known rating



| | 35 | 
| | -- | 

---



agency. To determine the
    probability of loss based on transaction risk, the Bank evaluates each transaction
    mainly by taking into account whether the risk is a short-term trade transaction
    or otherwise. This process results in a percentage for each credit representing
    the estimated probability of loss for the credit. These percentages are then
    multiplied by the amount of each credit and the amounts are then aggregated
    to determine this element of the allowance for credit losses. The Bank also
    reviews the adequacy of the allowance taking into account regional political,
    financial and economic trends affecting the portfolio, delinquency trends,
    volatility and significant concentrations that are not fully reflected in
    the model, in order to determine whether any adjustments to the model are
    warranted.

During
    the fourth quarter of 1999, the Bank changed the apportionment and presentation
    of the allowance for credit losses by dividing the allowance into three components:

| | (1) |  | An allowance for loan losses (reported as a deduction
        from loans);
| | --- |  | --------------------------------------------------------------------------

| | (2) |  | A reserve for losses on off-balance sheet credit
        risk (reported in other liabilities); and
| | --- |  | --------------------------------------------------------------------------------------------------

| | (3) |  | An allowance for losses on guarantees (reported
        in other liabilities).
| | --- |  | ------------------------------------------------------------------------------

However,
    on January 1, 2001, as a result of the adoption of SFAS 133, the allowance
    for losses on guarantees was eliminated as a component. See Allowance
    for Losses on Guarantees below.

At
    December 31, 2001, the Bank had a total allowance for credit losses (including
    loans and contingencies) of $194.7 million, reflecting additional provisions
    taken in 2001 of $77.1 million. During the first and second quarters of 2002,
    after careful consideration, and based upon rigorous analysis of all the relevant
    factors, the Board decided to further increase the allowance for credit losses
    by $20.0 million and $259.9 million, respectively, making the total allowance
    for credit losses $453.1 million at December 31, 2002, of which $379.8 million
    related to the Banks Argentine portfolio. During 2003, the total allowance
    for credit losses declined by $194.8 million. This reduction represented the
    net effect of $190.3 million of reductions in the specific allowance for Argentine
    loans, $31.3 million reduction in the general allowance for loan losses in
    connection with the Banks non-Argentine loan exposures, $16.3 million
    specific allowance for an impaired Brazilian loan and $10.6 million added
    to the reserve for losses on off-balance sheet credit risk, related primarily
    to exposures to Argentine banks and in Ecuador. As a result, the total allowance
    for credit losses amounted to $258.3 million at December 31, 2003, of which
    $195.4 million related to the Banks Argentine portfolio.

The
    following table sets forth information regarding the Banks allowance
    for credit losses with respect to total credits outstanding at the dates indicated.

|                                                           | At December 31,
|---------------------------------------------------------- | ---------------
|
|
|Components of the allowance for
      credit losses        |                
|                                                           |                
|Allowance for loan losses                                  |                
|Balance at beginning of
      the year                     |                
|Provision                                                  |                
|Recoveries                                                 |                
|Loans charged-off                                          |                
|                                                           |                
|Balance at the end of
      the year                       |                
|Reserve for losses on off-balance sheet credit
      risk: |                
|Balance at beginning of
      the year                     |                
|Provision                                                  |                
|                                                           |                
|Balance at end of the
      year                           |                
|Allowance for losses on guarantees (potential
      credit |                
|and market losses on options)                              |                
|Balance at beginning of
      the year                     |                
|Provision charged to expenses                              |                



| | 36 | 
| | -- | 

---



|                                                      | At December 31,
|----------------------------------------------------- | ---------------
|Components of the allowance for
      credit losses   |                
|Reclassification due to
      SFAS 133 adoption       |                
|Guarantees charged-off                                |                
|                                                      |                
|Balance at the end of
      the year                  |                
|                                                      |                
|Total allowance for credit losses                     |                
|                                                      |                
|Allowance for credit losses to total credit portfolio |                

The
    following table sets forth the distribution of the Banks loans charged-off
    against the allowance for loan losses, by country at December 31 of each year
    set forth below:

|          | At December 31,
|--------- | ---------------
|
|
|Argentina |                
|Canada    |                
|Mexico    |                
|Panama    |                
|Paraguay  |                
|Peru      |                
|          |                
|Total     |                
|          |                

The
    following table sets forth information regarding the Banks allowance
    for credit losses allocated by country of exposure at the dates indicated.

|                                        | At December 31,
|--------------------------------------- | ---------------
|
|Country                                
|
|Argentina                               |                
|Bolivia                                 |                
|Brazil                                  |                
|Chile                                   |                
|Colombia                                |                
|Costa Rica                              |                
|Dominican Republic                      |                
|Ecuador                                 |                
|El Salvador                             |                
|Guatemala                               |                
|Jamaica                                 |                
|Mexico                                  |                
|Nicaragua                               |                
|Panama                                  |                
|Paraguay                                |                
|Peru                                    |                
|Trinidad & Tobago                       |                
|Venezuela                               |                
|Other                                   |                
|                                        |                
|Total Allowance
      for Credit Losses |                
|                                        |                



| | 37 | 
| | -- | 

---



The
    following table sets forth information regarding the Banks allowance
    for credit losses by type of borrower in the Region at the dates indicated.

|                                   | At December 31,
|---------------------------------- | ---------------
|
|
|Private sector commercial banks    |                
|State owned commercial banks       |                
|Central banks                      |                
|Sovereign debt                     |                
|State owned exporting organization |                
|Private corporations               |                
|Other                              |                
|                                   |                
|Total                              |                
|                                   |                
|Shareholder                        |                
|Non-shareholder                    |                
|                                   |                
|Total                              |                
|                                   |                

Management
    believes that the Banks credit loss allowance level should reflect the
    potential for political and economic instability in countries in the Region
    and economic cycles. The recent events in Argentina, Ecuador, Bolivia, The
    Dominican Republic and Venezuela provide an example of the potential for economic
    instability in the Region and the need to maintain the allowance at an adequate
    level. Given the Banks large exposure to borrowers in a number of countries
    in the Region with the potential for economic and/or political instability
    and their high dependency on external capital, the Bank believes that its
    policy regarding the allowance for credit losses is appropriate. The determination
    of the appropriate level of allowances for credit losses necessarily requires
    managements judgment, including assumptions and estimates made in the
    context of rapidly changing political and economic conditions in many of the
    countries in the Region. Accordingly, there is no assurance that the Banks
    current level of the allowance will prove to be adequate in light of current
    and future events, particularly in Argentina.

Revenues
    Per Country

The
    following table sets forth information regarding the Banks approximate
    net revenues per country for the years ended December 31, 2001, 2002 and 2003,
    with net revenues calculated as the sum of net interest income, net commission
    income, gain on sale of securities available for sale, gain on early extinguishment
    of debt, gain (loss) on foreign currency exchange and other income.

|          | For the year ended December 31,
|--------- | -------------------------------
|
|
|Argentina |                                
|Bolivia   |                                
|Brazil    |                                
|Chile     |                                



| | 38 | 
| | -- | 

---



|                   | For the year ended December 31,
|------------------ | -------------------------------
|
|
|Colombia           |                                
|Costa Rica         |                                
|Dominican Republic |                                
|Ecuador            |                                
|El Salvador        |                                
|Guatemala          |                                
|Honduras           |                                
|Jamaica            |                                
|Mexico             |                                
|Nicaragua          |                                
|Panama             |                                
|Paraguay           |                                
|Peru               |                                
|Trinidad & Tobago  |                                
|Uruguay            |                                
|Venezuela          |                                
|Other              |                                
|                   |                                
|Total              |                                
|                   |                                

Competition

The
    Bank operates in a highly competitive environment in most of its markets.
    Management recognizes that the Bank needs to continue to invest and adapt
    to remain competitive. The Bank faces strong competition in making loans,
    in attracting deposits and in providing fee-generating services. The Banks
    competition in making loans comes principally from regional and international
    banks. Financial disintermediation by the securities market and specialized
    finance companies is another factor that represents competition to the Banks
    lending activity. Whenever economic conditions and risk perception improve
    in the largest countries of the Region, the competition from commercial banks,
    the securities markets and other new participants increases accordingly. This
    competition may have the effect of reducing the spreads of the Banks
    lending rates over its cost of funds and constraining the Banks profitability
    in the future. The Bank competes in its lending and deposit taking activities
    with other banks and international financial institutions, many of which have
    greater financial resources and offer sophisticated banking services.

The
    Bank believes that most of the competition it faces in the trade financing
    area and within the markets served by the Bank is from international banks,
    mostly European and North American, which provide similar financing services.
    Due to recent economic developments in the Region, the Bank has fewer competitors
    because many international banks have reduced their exposure in the Region
    or have withdrawn from the Region altogether. Although international banks
    compete with the Bank, they are also providers of funding for the Bank and
    represent a source of business for the Bank. For example, many of these international
    banks provide credit facilities to the Bank to finance the Banks trade
    finance activity.

The
    Bank also lends to branches or subsidiaries of certain international banks
    in the Region. At December 31, 2003, loans to international banks represented
    approximately 13.2% of the Banks total loans. Furthermore, the Bank
    provides country risk coverage to branches of certain international banks
    that want to increase their activity in the Region, but cannot increase cross-border
    risks.

During
    the last three years, the increase in the risk perception of Latin America
    cut available credit lines to the Region. Banks in both the United States
    and Europe, the traditional sources of credit facilities in Latin America,
    were impacted by two significant forces: first, many of these were facing
    credit, trading and/or profitability difficulties in their home markets, which
    forced them to focus their resources on the defense of their core franchises;
    second, under these circumstances, banks turned particularly risk adverse.
    International banks in general have not come back to the Region yet.



| | 39 | 
| | -- | 

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In
    response to recent developments in the Region and the effect of such developments
    on the Bank (see Key InformationRisk Factors), the Banks
    management has decided to focus its future efforts on its core trade financing
    business.

The
    Bank believes that competition also comes from investment banks and the securities
    markets, which provide liquidity to the financial systems in certain countries
    in the Region as well as non-bank specialized financial institutions. The
    Bank competes primarily on the basis of competitive pricing in financing trade-related
    transactions, providing a stable supply of credit to its clients and the quality
    of its service. The Bank believes that it continues to possess a competitive
    advantage in that it enables its customer banks to meet their clients
    financing needs, but does not compete directly with these banks for the business
    of their clients. Moreover, the Bank has developed customer loyalty because
    it has been a consistent source of trade-related financing. The Bank believes
    that it is an important source of trade finance to many of its clients. The
    Bank also believes that its operating efficiencies and business focus constitute
    important competitive advantages in certain markets.

The
    trade financing business is also subject to changes. Increased open account
    exports and new financing requirements from multinational corporations are
    putting more pressure on the way banks traditionally intermediate foreign
    trade financing. The Bank cannot predict with certainty the changes that may
    occur and affect the competitiveness of its businesses. Although the Bank
    has undertaken several initiatives to adapt to and benefit from these changes,
    it is possible that competition with the Banks products will, in the
    future, reduce demand for the Banks services. If this were to occur,
    the Bank may be required to take steps to further adapt to the changing competitive
    environment.

Consolidation
    in the banking systems of the markets in which the Bank operates could potentially
    affect the competitive environment in these markets. The consolidation process
    in most countries of the Region has reduced the number of client banks that
    the Bank can work with. The acquisition of local banks by large international
    banks in the local markets of the Region may also change the competitive environment.
    The Bank cannot predict with certainty the extent to which these changes in
    the banking industry may occur or the success that they may achieve. Although
    the Bank currently has a strong position in each of its market segments and
    is undertaking several initiatives to adapt, these changes in the business
    and in the markets of this Region could potentially place the Bank at a competitive
    disadvantage with respect to scale, resources and its ability to develop and
    diversify its sources of income.

Regulation

General

The
    Superintendency of Banks of Panama (the Superintendency of Banks)
    regulates, supervises and examines BLADEX. In addition, BLADEX Cayman is regulated,
    supervised and examined by government authorities in the Cayman Islands, and
    the New York Agency is regulated, supervised and examined by the New York
    Banking Department and the Federal Reserve Board. The regulation of the Bank
    and BLADEX Cayman by relevant Panamanian and Cayman Islands authorities differs
    from the regulation generally imposed on banks in the United States by federal
    and state regulatory authorities.

Panamanian
    Law

On
    February 26, 1998, Panama adopted Decree-Law No. 9 (the Banking Law),
    which is a comprehensive revision and restatement of the banking legislation
    in Panama. The Banking Law took effect on June 12, 1998.

BLADEX
    operates in Panama under a General Banking License issued by the National
    Banking Commission, predecessor of the Superintendency of Banks, and is subject
    to supervision and examination by the Superintendency of Banks. Banks operating
    under a General Banking License (General License Banks) are



| | 40 | 
| | -- | 

---



entitled to engage in all
    aspects of the business of banking in Panama, including accepting local and
    offshore deposits as well as entering into banking transactions in Panama
    that may have an economic impact outside of Panama.

General
    License Banks must have a paid-in capital of not less than $10 million. Additionally,
    General License Banks must maintain minimum capital of 8% of their total risk-weighted
    assets. Capital is defined to include primary capital and secondary capital.
    Primary capital (Tier 1 capital) is comprised of paid-in capital, declared
    reserves and retained earnings while secondary capital (Tier 2 capital) includes
    undeclared reserves, reevaluations reserves, general reserves for losses,
    certain hybrid debt capital instruments and certain subordinated indebtedness.
    Secondary capital may not exceed primary capital. These standards are based
    on the Basle Accord Guidelines. The Superintendency of Banks is authorized
    to increase the minimum capital requirement percentage in Panama in the event
    that generally accepted international capitalization standards as set forth
    in the Basle Accord become more stringent, in order to comply with such new
    international standards.

General
    License Banks are required to maintain 30% of their global deposits in liquid
    assets (which include short-term loans to other banks and other liquid assets)
    of the type prescribed by the Superintendency of Banks. In addition, General
    License Banks are required to maintain local assets in Panama in an amount
    not less than 85% of the deposits received from entities in Panama.

The
    Banking Law has abolished regulations regarding interest rate ceilings provided
    for in the prior banking law. Currently, banks in Panama can freely fix the
    amount of interest to be charged on their loans and with respect to operations.
    Banks in Panama are required to indicate the effective interest rates of loans
    and deposits in their statements to clients or at a clients request.
    Under the Banking Law, deposits from central banks and other similar depositories
    of the international reserves of sovereign states are immune from any attachment
    or seizure proceedings.

Pursuant
    to the Banking Law, no bank in Panama may make loans or issue guarantees or
    any other obligations, to any one person or a group of related persons in
    excess of 25% of the Banks total capital; provided that, for Panamanian
    banks (i) whose shares are owned by governmental institutions and private
    institutions, (ii) whose principal office is located in Panama, and (iii)
    whose main line of business is lending to other banks (Exempted Banks),
    the foregoing lending limit is 30%. BLADEX is an Exempted Bank.
    As a result of the Banks decision to increase its allowance for credit
    losses and to take a charge for impairment losses on securities in 2002 and
    the corresponding reduction in the Banks total assets and capital, the
    Bank exceeded this 30% limit with respect to several borrowers. The Superintendency
    of Banks granted the Bank a waiver of this requirement in July of 2002, which
    allowed it one year to reduce its credits to non-Argentine borrowers to the
    30% limit (which it has done), and an unspecified period to reduce exposure
    to Argentine clients to the 30% limit, as market conditions allow. During
    the second quarter of 2003, the Bank raised new equity capital in the amount
    of $147.0 million through a rights offering. As a result, the Bank is in compliance
    with the above lending limits.

Under
    the Banking Law, a bank may not make loans or issue guarantees or any other
    obligations to related parties that exceed (i) 5% of its total
    capital, in the case of unsecured transactions, (ii) 10% of its total capital,
    in the case of collateralized transactions (other than loans secured by deposits
    in the bank), and (iii) 50% of its total capital, in the case of loans secured
    by deposits in the bank. For these purposes a related party is
    (a) any one or more of the banks directors, (b) any shareholder
    of the bank who directly or indirectly owns 5% or more of the outstanding
    and issued capital stock of the bank, (c) any company of which one or more
    of the banks directors is a director or officer or where one or more
    of the banks directors is a guarantor of the loan or credit facility,
    (d) any company or entity in which the bank or any one of its directors or
    officers can exercise a controlling influence, (e) any company or entity in
    which the bank or any one of its directors or officers owns 20% or more of
    the outstanding and issued capital stock of such company or entity and (f)
    managers, officers and employees of the bank, or their respective spouses
    (other than home mortgage loans or guaranteed personal loans under general
    programs approved by the bank for employees). The Superintendency of Banks
    has the power to allow Exempted Banks not to take into consideration loans
    granted to other banks for purposes of determining



| | 41 | 
| | -- | 

---



compliance with the above
    lending limits, provided that certain conditions of transparency and independence
    are met, as prescribed under the Banking Law.

The
    Banking Law contains further limitations and restrictions with respect to
    loans and credit facilities to parties related to the lending banks. For instance,
    under the Banking Law, all loans made to managers, officers, employees or
    shareholders who are owners of 5% or more of the lending Banks outstanding
    and issued capital stock shall be made on terms and conditions similar to
    those given by the bank to its clients in arms-length transactions and
    which reflect market conditions. In addition, shares of a bank cannot be pledged
    or offered as security for loans or credit facilities issued by such bank.

In
    addition to the foregoing requirements, there are certain other restrictions
    applicable to General License Banks, including (i) a requirement that a bank
    must notify the Superintendency of Banks before opening or closing a branch
    or office in Panama and obtain approval from the Superintendency of Banks
    before opening or closing a branch or subsidiary outside Panama and (ii) a
    requirement that a bank obtain approval from the Superintendency of Banks
    before it liquidates its operations, merges or consolidates with another bank
    or sells all or substantially all of its assets. The subsidiaries of Panamanian
    banks established in foreign jurisdictions must observe the legal and regulatory
    provisions applicable in Panama regarding the sufficiency of capital, as prescribed
    under the Banking Law.

The
    Banking Law provides that banks in Panama are subject to inspection by the
    Superintendency of Banks, which must take place at least once every two years.
    Such supervisory powers of the Superintendency of Banks also extend to a banks
    subsidiaries and branches. The Superintendency of Banks last inspected BLADEX
    in 2002 and the results of this inspection were fully satisfactory. In 2003,
    The Superintendency of Banks performed a follow-up inspection and the results
    of this follow-up inspection were also fully satisfactory. BLADEX is required
    to file monthly balance sheets and related financial statements with the Superintendency
    of Banks. Additionally, banks are required to file with the Superintendency
    of Banks quarterly and annual statements indicating the performance of their
    credit facilities and other reports and information, as prescribed by the
    Superintendency of Banks. In addition, banks are required to make available
    for inspection their accounting records, minutes, reports on cash on hand,
    securities, receipts, and any other reports or documents that are necessary
    for the Superintendency of Banks to ensure compliance with Panamanian banking
    laws and regulations. Banks subject to supervision may be fined by the Superintendency
    of Banks for violations of Panamanian banking laws and regulations.

Under
    the Banking Law, the Superintendency of Banks may order the reorganization
    of a bank when it considers this course of action to be in the best interests
    of the depositors, and to guarantee the solvency and continuity of such bank.
    The Superintendency of Banks is given broad powers to reorganize a bank. The
    Superintendency of Banks may request the shareholders of a bank to pay in
    additional capital or authorize the issuance of new shares and the sale of
    such shares to third parties at prices pre-determined by the Superintendency
    of Banks. Furthermore, the Superintendency of Banks may recommend fundamental
    restructuring schemes, including merger or consolidation with other banks,
    negotiation of bridge loans, sale or partial liquidation of assets and granting
    of security interests in connection with such reorganization plans. Ultimately,
    if the reorganization of the applicable bank fails, the Superintendency of
    Banks may begin the liquidation process.

The
    Banking Law has established an annual supervisory charge to be paid by General
    License Banks equal to $30,000 plus $35.00 per $1.0 million in assets, with
    the latter amount being limited to a maximum charge of $100,000. The total
    amount due in this regard by BLADEX for the year 2003 was $130,000.

Cayman Islands
    Law

BLADEX
    Cayman was registered on September 8, 1987, under The Companies Law (1985
    Revision) of the Cayman Islands as replaced by the Companies Law (2003 Revision).
    BLADEX Cayman is the holder of a category B banking license issued
    under the Banks and Trust Companies Law (2001 Revision) of the Cayman



| | 42 | 
| | -- | 

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Islands as replaced by
    the Banks and Trust Companies Law (2003 Revision) (the Banks and Trust
    Companies Law). As the holder of a category B banking license,
    BLADEX Cayman is licensed to carry on all kinds of banking business in any
    part of the world other than the Cayman Islands, subject to the restrictions
    set forth in Section 6 of the Banks and Trust Companies Law, which restricts
    the holder of a category B banking license from taking deposits
    from persons resident in the Cayman Islands or investing in any asset representing
    a claim on any person resident in the Cayman Islands, subject to certain exceptions
    in respect of, inter alia, exempted or ordinary non-resident companies and
    other licensees.

Banks
    and trust companies in the Cayman Islands must be licensed under the Banks
    and Trust Companies Law. The Cayman Islands Monetary Authority processes such
    license applications and regulates licensed banks. The Cayman Islands Monetary
    Authority have wide powers under the Banks and Trust Companies Law to investigate
    the activities, and review the banking practices, of licensees, and to protect
    the interests of depositors. The Cayman Islands Monetary Authority examines
    the affairs and business of licensees through on-site inspections and examination
    of audited and unaudited financial statements and other regular returns, or
    in any other manner, for the purpose of ensuring compliance with the Banks
    and Trust Companies Law. The Cayman Islands Monetary Authority has power to
    grant and revoke licenses, impose conditions upon a licensee, appoint advisers
    to a licensee and appoint a receiver or manager of a licensee.

The
    International Convergence of Capital Measurement and Capital Standards established
    by the Basle Committee on Banking Regulations and Supervisory Practices have
    been adopted by the Cayman Islands Monetary Authority. The registered office
    of BLADEX Cayman is at Coutts House, 1446 West Bay Road, PO Box 707 GT,
    Grand Cayman, Cayman Islands, British West Indies.

United States
    Law

New
    York State Law. The New York Agency, established in 1989, is licensed
    by the Superintendent of Banks of the State of New York (the Superintendent)
    under the New York Banking Law. The New York Agency is examined by the New
    York State Banking Department and is subject to banking laws and regulations
    applicable to a foreign bank that operates a New York agency. In this regard,
    New York agencies of foreign banks are regulated substantially the same as,
    and have similar powers to, New York state-chartered banks, except with respect
    to deposit-taking activities.

The
    Superintendent is empowered by law to require any branch or agency of a foreign
    bank to maintain in New York specified assets equal to a percentage of the
    branch or agencys liabilities, as the Superintendent may designate.
    Under the current requirement, the New York Agency is required to maintain
    a pledge of 1% of its total third-party liabilities, subject to a minimum
    of $2.0 million. At December 31, 2003, the New York Agency maintained a pledge
    of $2.2 million, representing the minimum required amount.

In
    addition, the Superintendent retains the authority to impose specific asset
    maintenance requirements upon individual agencies of foreign banks on a case-by-case
    basis. No such special requirement has been prescribed for the New York Agency.

The
    Superintendent is authorized to take possession of the business and property
    of a New York agency of a foreign bank whenever an event occurs that would
    permit the Superintendent to take possession of the business and property
    of a state-chartered bank. These events include the violation of any law,
    unsafe business practices, an impairment of capital, and the suspension of
    payments of obligations. In liquidating or dealing with an agencys business
    after taking possession of the agency, the New York Banking Law provides that
    the claims of creditors which arose out of transactions with the agency are
    granted a priority with respect to the agencys assets over other creditors
    of the foreign bank.

Federal
    Law. In addition to being subject to New York State laws and regulations,
    the New York Agency is subject to federal regulations, primarily under the
    International Banking Act of 1978 (the IBA). The IBA generally
    extends federal banking supervision and regulation to the United States offices
    of foreign banks. Under the IBA, the United States branches and agencies of
    foreign banks, including the New York Agency, are subject



| | 43 | 
| | -- | 

---



to reserve requirements
    on certain deposits. At present, the New York Agency has no deposits subject
    to such requirements. The New York Agency is also subject to reporting and
    examination requirements imposed by the Federal Reserve Board similar to those
    imposed on domestic banks that are members of the Federal Reserve System.
    In this regard, the Foreign Bank Supervision Enhancement Act of 1991 (the
    FBSEA) has amended the IBA to enhance the authority of the Federal
    Reserve Board to supervise the operations of foreign banks in the United States.
    In particular, the FBSEA has expanded the Boards authority to regulate
    the entry of foreign banks into the United States, supervise their ongoing
    operations, conduct and coordinate examinations of their U.S. offices with
    state banking authorities, and terminate their activities in the United States
    for violations of law or for unsafe or unsound banking practices.

In
    addition, under the FBSEA, state-licensed branches and agencies of foreign
    banks may not engage in any activity that is not permissible for a federal
    branch (i.e., a branch of a foreign bank licensed by the federal government
    through the Office of the Comptroller of the Currency of the Treasury Department
    (OCC), rather than by a state), unless the Federal Reserve Board
    has determined that such activity is consistent with sound banking practices.
    The IBA also restricts the ability of a foreign bank with a branch or agency
    in the United States to engage in non-banking activities in the United States,
    to the same extent as a United States bank holding company. Under the Gramm-Leach-Bliley
    Financial Modernization Act of 1999 (the GLB Act), a foreign bank
    with a branch or agency in the United States may engage in a broader range
    of non-banking financial activities, provided it has qualified and registered
    with the Federal Reserve Board to be a financial holding company
    (FHC). As of the date hereof, BLADEX has not registered with the
    Federal Reserve Board as an FHC.

The
    New York Agency does not engage in retail deposit-taking in the United States,
    and deposits with the New York Agency are not insured by the Federal Deposit
    Insurance Corporation (FDIC). Under the FBSEA, the New York Agency
    may not obtain FDIC insurance and generally may not accept deposits of less
    than $100,000.

The
    regulation of the New York Agency by New York State and federal banking authorities
    extends only to the activities of the New York Agency and not the activities
    of the Bank outside of the United States. As a result, only 5.8% of the Banks
    assets and 4.3% of its net interest income in 2003 were subject to this regulation.

Comparison
    of United States, Panama and Cayman Islands Banking Regulation

Since
    enactment of the Banking Law in Panama in 1998, the regulation and supervision
    of BLADEX in Panama is broadly similar to the regulation and supervision of
    comparable banking organizations in the United States. The supervision and
    regulation of banks holding a Class B license in the Cayman Islands, including
    BLADEX Cayman, for the most part is substantially less stringent than banking
    regulation and supervision in the United States. The following discussion
    highlights the principal differences in the three jurisdictions, with respect
    to key aspects of banking regulation and supervision.

Capital
    Adequacy. The key measure of bank soundness internationally is the risk-based
    capital standards under the Basle Accord. In the United States, both domestic
    banks and foreign banks that operate offices in the United States generally
    are required to comply with the Basle guidelines. Under the Banking Law, Panama
    banks, including BLADEX, are likewise subject to the Basle guidelines. The
    Cayman Islands Monetary Authority likewise has adopted the Basle standard.
    When ascertaining capital adequacy of foreign banks with Cayman Islands licensed
    branches, the Cayman Islands Monetary Authority applies the Basle standard
    to the head office of that branch and not the branch itself. In addition,
    the Cayman Islands Monetary authority requires subsidiaries of foreign entities,
    such as BLADEX Cayman, to maintain a minimum risk asset ratio of 12% instead
    of the recommended 8% under the Basle guidelines. Accordingly, there is no
    significant difference among the three jurisdictions in this regard.

Deposit-taking.  Under
  the Banking Law, BLADEX has full power to accept deposits in Panama from residents
  and non-residents of Panama. Banks in the United States that take deposits from
  the public are required



| | 44 | 
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---



to have FDIC insurance.
    However, agencies of foreign banks, including the New York Agency, are prohibited
    from taking deposits from U.S. residents. Similarly, banks holding a Class
    B license in the Cayman Islands, such as BLADEX Cayman, may not take deposits
    from Cayman residents.

Lending
    Limits. Limitations on the amount that can be loaned to a single borrower,
    or group of related borrowers, is considered an important aspect of bank safety
    and soundness in the United States. Under New York law, banks generally are
    limited to lending no more than 15% of their capital and surplus to any one
    borrower or group of related borrowers. An additional 10% may be loaned if
    fully secured. Federal law imposes similar requirements on national banks
    and federally licensed branches and agencies of foreign banks. Because BLADEX
    operates in New York through the New York Agency, these limitations apply
    to the Banks total capital and surplus. The limitations under the Banking
    Law in Panama are somewhat less stringent, since up to 25% may be loaned unsecured.
    Also, as an Exempted Bank, BLADEX may lend up to 30% in some circumstances.
    The Cayman Islands Monetary Authority applies a principle of best practice
    with regard to large exposures (which includes loans and advances to unconnected
    parties). The principle of best practice provides that large exposures are
    subject to a general limit of 25% of the capital base of the lending institution
    per exposure. This limit can be increased to 50% for consolidated cross border
    supervised subsidiaries that have a parent company guarantee for the full
    amount of the exposure from an entity that is supervised in accordance with
    the Basel Core Principles for Effective Banking Supervision and that has accounted
    for such exposure on a consolidated basis. Prior notification to the Cayman
    Islands Monetary Authority of the parent company guarantee and approval by
    the Cayman Islands Monetary Authority of the parent company is required before
    the 25% single exposure limit can be exceeded. In addition, the Cayman Islands
    Monetary Authority has to be satisfied that the parent company can take over
    the exposure itself without exceeding its own large exposure limits. The Cayman
    Islands Monetary Authority is in the process of producing Regulations regarding,
    among other things, large exposures. It is expected that, in addition to including
    limits on single large exposures, those Regulations will include limits on
    the aggregate amount of large exposures. There is no applicable limit under
    Cayman law; however, BLADEX Cayman may only engage in banking transactions
    outside of the Cayman Islands.

Insider
    Lending. United States banks that are FDIC-insured are subject to limitations
    on loans to officers and directors (insiders), but are exempt
    from the prohibition on loans to insiders enacted into law in 2002 under the
    Sarbanes-Oxley Act. Because it issues securities registered with the Securities
    and Exchange Commission and is not FDIC-insured, BLADEX is subject to an outright
    prohibition on insider lending, and in this respect is more stringently regulated
    than most United States domestic banks. Under Panama law, BLADEX is subject
    to percentage limitations on insider lending that in some cases may be more
    liberal than under United States law. Under the Sarbanes-Oxley Act, however,
    the United States prohibition applies to loans made by BLADEX to insiders,
    even if made outside the United States. The Cayman Islands Monetary Authority
    applies a principle of best practice with regard to insider loans. The principle
    of best practice provides that insider loans are subject to an individual
    limit of 1% of the capital base of the lending institution. The Cayman Islands
    Monetary Authority is in the process of producing Regulations regarding, among
    other things, insider lending. It is expected that, in addition to including
    limits on single insider loans, those Regulations will include limits on the
    aggregate amount of insider loans.

Comprehensive
    Consolidated Supervision. Foreign banks are not permitted to open offices
    in the U.S. unless the Federal Reserve determines that they are subject to
    comprehensive consolidated supervision (CCS) on a
    worldwide basis by their home country regulator. Because the New York Agency
    was established prior to 1991, it has not been required to meet this standard.
    To date, the Federal Reserve has not made a determination that any Panamanian
    bank is subject to CCS. However, such a determination would only be made in
    the context of an application by a Panamanian bank to establish or expand
    its operations in the United States. All banks operating in Panama, both domestic
    and foreign, are also subject to CCS. Foreign banks are not permitted to open
    offices in Panama unless the Superintendency of Banks determines that the
    foreign bank is subject to CCS by its home country regulator. Foreign offices
    and subsidiaries of Panamanian banks located outside of Panama are subject
    to supervision by the Superintendency of Banks under CCS. Only in exceptional
    circumstances will the Cayman Islands Monetary Authority consider applications
    for a Cayman Islands banking licence from entities



| | 45 | 
| | -- | 

---



that are not either direct
    branches, subsidiaries or affiliates of international banks worldwide. Where
    applications are made on behalf of direct branches, subsidiaries or affiliates
    of international banks worldwide, prior to the grant of a banking licence,
    the Cayman Islands Monetary Authority seeks assurance from the home country
    regulatory authority of CCS and good standing of the applicant.

Reporting
    and Examination. Under United States law, all banks are subject to on-site
    examination by State and federal regulators on an annual basis. In addition,
    foreign banks with a branch or agency in New York, including BLADEX, are required
    to file annual reports with the Federal Reserve and the New York State Banking
    Department, and are required to notify the Federal Reserve if they undergo
    significant changes in structure in the United States, such as by establishing
    a subsidiary. Under Panama law, examinations are required to be carried out
    at least every two years. In addition, banks are required to file monthly,
    quarterly and annual reports with the Superintendency of Banks and are also
    required to notify, and in some cases obtain prior approval from, the Superintendency
    of Banks if they undergo significant changes in structure. It is the policy
    of the Cayman Islands Monetary Authority to conduct on-site inspections of
    licensees such as BLADEX Cayman on a one to three year rotation, depending
    on the nature of the institution and the risk assessment of that institution
    by the Cayman Islands Monetary Authority. Quarterly reporting schedules and
    annual audited accounts are also required to be filed with the Cayman Islands
    Monetary Authority and, in order to ensure that the Cayman Islands Monetary
    Authority has accurate information in respect of licensees, updated business
    plans are periodically requested. Also, the Cayman Islands Monetary Authority
    has a general authority to investigate the affairs of licensees, as it deems
    necessary or appropriate.

# 4.C
  Organizational Structure

See
    History and Development of the Company.

# 4.D
  Property, Plants and Equipment

The
    Bank owns its principal offices located at Calle 50 y Aquilino de La Guardia
    in Panama City, which was completed in 1983. The building, with office space
    of 3,457 square meters, is used solely by the Bank and is located on a 2,672
    square meter site in the banking district of the city. The Bank also leases
    175 square meters of office space in a nearby building. In addition, the Bank
    leases the following office space: (i) 170 square meters for its Buenos Aires
    Representative Office at Ave. Corrientes 617, 9 Piso, Buenos Aires, Argentina,
    (ii) 149 square meters for BLADEX Representação Ltda.
    at Rua Leopoldo Couto de Magalhäes Junior 110, 9o Andar, Sao
    Paulo, SP, Brazil, (iii) 130 square meters for its Mexico City Representative
    Office at Ruben Dario 281, Oficina No 1203, Colonia Bosque de Chapultepec,
    Mexico City, Mexico; and (iv) 302 square meters of office space at 708
    Third Avenue, 16th Floor, New York, NY 10017 for its New York Agency. See
    also Note 9 to Consolidated Financial Statements.

# Item
  5. Operating and Financial Review and Prospects

The
    following discussion should be read in conjunction with the Banks Consolidated
    Financial Statements and the Notes thereto included elsewhere in this Annual
    Report.

# Nature of Earnings

The
    Bank derives its income principally from net interest income and, to a lesser
    extent, from fee income. Net interest income (the difference between the interest
    income the Bank receives on interest-earning assets and the interest it pays
    on interest-bearing liabilities) is generated mostly by the Banks lending
    activities. Fee income is generated by the issuance, confirmation and negotiation
    of letters of credit and guarantees covering commercial and country risk,
    loan origination and sales.



| | 46 | 
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---



5.A
  Operating Results

The
  following table summarizes changes in components of the Banks net income
  and performance at and for the periods indicated below.

At and
          For the Year Ended December 31,2001
      
      2002
      
      2003(in
        $ thousands, except per share 
        amounts and percentages)Total
        interest income
      
      $ 378,422
      
      $ 165,800
      
      $   98,395Total
        interest expense (1)
      
      (260,733
      )
      (101,021
      )
      (44,408
      )Net interest
        income
      
      117,688
      
      64,779
      
      53,987Provision
        for loan losses
      
      (77,144
      )
      (272,586
      )
      69,508Net interest
        income (loss) after provision for loan losses
      
      40,544
      
      (207,807
      )
      123,495Other
        income (expense):Commission
        income, net (1)
      
      14,741
      
      8,886
      
      7,446Provision
        for losses on off-balance sheet credit risk
      
      0
      
      (6,170
      )
      (10,603
      )Derivatives
        and hedging activities
      
      7,379
      
      (341
      )
      (7,988
      )Impairment
        loss on securities
      
      (40,356
      )
      (44,268
      )
      (953
      )Gain
        on early extinguishment of debt
      
      0
      
      1,430
      
      789Gain
        on the sale of securities available for sale
      
      4,798
      
      184
      
      22,211Gain
        (loss) on foreign currency exchange
      
      (21
      )
      301
      
      (382
      )Other
        income
      
      674
      
      553
      
      42Net other
        income (expense)
      
      (12,783
      )
      (39,425
      )
      10,562Total
        operating expenses
      
      (24,008
      )
      (19,259
      )
      (22,561
      )Income
        (loss) from continuing operations
      
      3,752
      
      (266,492
      )
      111,496Discontinued
        operations:Loss
        from operations and disposal of business segment
      
      (2,388
      )
      (2,346
      )
      0Income
        (loss) before cumulative effect of accounting change
      
      1,364
      
      (268,838
      )
      111,496Cumulative
        effect of accounting change
      
      1,129
      
      0
      
      0Net income
        (loss)
      
      $     2,494
      
      $(268,838
      )
      $ 111,496Net income
        (loss) available for commonstockholders
      
      $     1,258
      
      $(269,850
      )
      $ 111,130Net income
        (loss) per share after Preferred Stockdividend
        and after cumulative effect of accounting change
      
      $       0.07
      
      $  (15.56
      )
      $       3.88Return
        on average assets
      
      0.04
      %
      (6.47
      )%
      4.24
      %Return
        on average stockholders equity
      
      0.18
      %
      (60.48
      )%
      23.91
      %


(1)           For 2001 and 2002,
commission expense related to borrowings and placements was           reclassified from
commission expense and other charges to interest expense to           conform with the
required presentation for 2003 pursuant to U.S. GAAP.

Net Interest
  Income

The
Bank believes that the most important factors that affect net interest income are
operating net interest income, the effect of the interest rate gap, interest income on
available capital funds and one-time interest income and adjustments. Operating net
interest income consists of interest income generated by the Banks lending
activities, which represents the difference between average lending margins and the
average cost of funds. The effect of the interest rate gap consists of interest income
generated by the mismatch between the maturities of assets and the maturities of
liabilities.



| | 47 | 
| | -- | 



---



The
  following table sets forth information regarding the most important factors
  that affect net interest income for the periods indicated below.

For the Year Ended 
        December 31,2001
      
      2002
      
      2003(in $ millions)Operating net interest income
      
      $       66.8
      
      $     52.1
      
      $    42.0Effect of interest rate gap
      
      18.6
      
      6.7
      
      0.6Interest income on available capital funds
      
      34.0
      
      15.4
      
      11.5Reversal of unpaid interest accrued on non-accruing
        loans and 
          adjustments
      
      (1.7
      )
      (9.4
      )
      0.1Net interest income
      
      $     117.7
      
      $     64.8
      
      $    54.0


Net
interest income was $54.0 million for 2003, compared to $64.8 million for 2002. The $10.8
million decline was mainly due to lower average loan volumes ($2.2 billion in 2003 versus
$3.4 billion in 2002). Another factor that affected the Banks net interest income,
to a lesser extent, was related to the Banks interest rate gap structure. During
2003, the combination of a matched asset and liability maturity profile and a stable
interest rate environment reduced the gains from the interest rate gap compared to the
year 2002, when the Bank benefited from a declining interest rate environment and a larger
asset and liability mismatch. Lower average interest rates also generated a lower return
on the Banks available capital funds, which are mostly invested in LIBOR-based
floating rate assets.

Net
interest income was $64.8 million for the year 2002, compared to $117.7 million for the
year 2001. The $52.9 million decline was mainly due to a decline of $18.5 million in
interest income generated on available capital funds. The return on available capital
funds is sensitive to interest rates, as capital funds are placed mostly in short-term
interest earning assets, which are priced based on the London Interbank Offered Rate
(LIBOR). During the year 2002, average LIBOR interest rates declined by
approximately 200 basis points compared to the year 2001. Another factor contributing to
the decline in net interest income was a $13.9 million reduction in operating net interest
income which reflects the interest income generated by the Banks lending activities
calculated by multiplying the average loan and investment portfolio by the difference
between average lending margins and the marginal cost of funds. The reduction in net
interest income was mainly due to the reduction of $1.7 billion in the average loan and
investment portfolio, which was partially offset by an increase of 31 basis points in
average lending margins associated with performing loans and investments (i.e., excluding
Argentine loans and investments for which interest income is recorded on a cash basis).
The Banks interest rate gap structure also affected net interest income negatively
by $11.9 million during the year 2002 as compared to the year 2001. The effect of the
interest rate gap consists of interest income generated by the mismatch between the
maturities of assets and the maturities of liabilities, as deposits reprice faster than
loans. During 2002, the combination of a favorable asset and liability maturity profile
and a stable interest rate environment reduced the gains from the interest rate gap
compared to the year 2001, when the Bank benefited from a declining interest rate
environment and a larger asset and liability mismatch on its balance sheet. The interest
income reversal on loans and investments placed on non-accrual status during 2002 of $9.4
million, compared to $1.7 million in 2001, also contributed to the reduction in net
interest income for 2002.

Distribution
  of Assets, Liabilities and Stockholders Equity; Interest Rates and Differentials

The
following table presents for the periods indicated the distribution of consolidated
average assets, liabilities and stockholders equity as well as the total dollar
amounts of interest income from average interest-earning assets and the resulting yields,
and the dollar amounts of interest expense and average interest-bearing liabilities, and
corresponding information regarding rates. Non-accruing loans are included in the
calculation of



| | 48 | 
| | -- | 



---



the average balance of loans and
interest on these loans is accounted for on a cash basis. Average balances have been
computed on the basis of consolidated daily average balance sheets.

Average
  Balance Sheet Assets, Liabilities and 
  StockholdersEquity and Interest Income and Expense

|                                                                                           | Year Ended December 31,                   
|------------------------------------------------------------------------------------------ | ------------------------------------------
|                                                                                           | 2001                                      
|Description                                                                                | Average 
      Balance                    
|                                                                                           | (in $ thousands,
      except percentages)
|INTEREST-EARNING ASSETS                                                                    |                                           
|Interest-bearing deposits with banks                                                       | $400,191                                  
|Securities purchased under agreements to
      resell                                      | 181,385                                   
|Loans, net                                                                                 | 4,919,700                                 
|Impaired loans                                                                             | 12,822                                    
|Investment securities                                                                      | 429,165                                   
|                                                                                           |                                           
|TOTAL INTEREST-EARNING ASSETS                                                              | $5,943,262                                
|                                                                                           |                                           
|Non-interest-earning assets                                                                | $146,149                                  
|Allowance for loan losses                                                                  | (116,127                                  
|Other assets                                                                               | 29,441                                    
|                                                                                           |                                           
|TOTAL ASSETS                                                                               | $6,002,725                                
|                                                                                           |                                           
|INTEREST-BEARING LIABILITIES                                                               |                                           
|Deposits                                                                                   | $1,738,825                                
|Short-term borrowings and placements                                                       | 1,705,731                                 
|Medium- and long-term borrowings and placements                                            | 1,714,333                                 
|Redeemable preferred stock (1)                                                             | 0                                         
|                                                                                           |                                           
|TOTAL INTEREST-BEARING LIABILITIES (2)                                                     | $5,158,889                                
|                                                                                           |                                           
|Non interest bearing liabilities and other
      liabilities                               | $128,638                                  
|TOTAL LIABILITIES                                                                          | $5,287,527                                
|Redeemable preferred stock                                                                 | 15,387                                    
|Stockholders equity                                                                       | 699,811                                   
|                                                                                           |                                           
|TOTAL LIABILITIES, 
         REDEEMABLE PREFERRED STOCK AND 
         STOCKHOLDERS EQUITY | $6,002,725                                
|                                                                                           |                                           
|NET INTEREST SPREAD (3)                                                                    |                                           
|NET INTEREST INCOME AND NET INTEREST MARGIN
      (4)                                      |                                           
|                                                                                           |                                           

---

|(1) |  | SFAS
150, which requires the inclusion of the redeemable preferred stock as part           of
the other liability line item, was effective as of July 1, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | For
2002, commission expense related to borrowings and placements was           reclassified
from commission expense and other charges to interest expense to           conform with
the required presentation for 2003 pursuant to U.S. GAAP.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Net
interest spread represents the average yield earned on interest-earning           assets
less the average rate paid on interest-bearing liabilities.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Net
interest margin is computed by dividing net interest income (total interest
          earned minus total interest paid) by the average balance of interest-earning
          assets.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
2003, the net interest margin increased to 1.87% from 1.48% in 2002 mainly due to higher
interest collections on non-accruing assets in 2003.

In
2002, the net interest margin decreased to 1.48% from 1.98% in 2001. The decline of 50
basis points in the net interest margin during the year 2002, as compared to 2001, was
mainly due to a combination of: (i) lower interest rates, which generated a lower return
on the Banks available capital funds, resulting in a negative effect on the net
interest margin; (ii) the interest income reversal on loans and investments placed on
non-accrual status during 2002 of $9.4 million, compared to $1.7 million in 2001, which
had a negative effect on the net interest margin; (iii) lower gains from the Banks
liability-sensitive interest rate gap, which had a negative effect on the net interest
margin, and (iv) higher net lending margins, resulting in a positive effect on the net
interest margin.



| | 49 | 
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---

Changes in
  Net Interest Income  Volume and Rate Analysis

Net
interest income is affected by changes in volume and changes in interest rates. Volume
changes are caused by differences in the level of interest-earning assets and
interest-bearing liabilities. Rate changes result from differences in yields earned on
interest-earning assets and rates paid on interest-bearing liabilities. The following
table sets forth a summary analysis of changes in net interest income of the Bank
resulting from changes in average interest-earning asset and interest-bearing liability
balances (volume) and changes in average interest rates for 2001 compared to 2002 and for
2002 compared to 2003. Volume and rate variances have been calculated based on movements
in average balances over the period and changes in interest rates on average
interest-earning assets and average interest-bearing liabilities. Variances caused by
changes in both volume and rates have been allocated equally to volume and rate.

|                                                                 |  | 2002
      vs. 2001    |   | 2003
      vs. 2002
|---------------------------------------------------------------- |  | ---------------------- | - | -------------------
|                                                                 |  | Volume                 |   | Rate               
|                                                                 |  | (in
      $ thousands)
|                                                                 |  |                        |   |                    
|INCREASE
      (DECREASE) IN                                     |  |                        |   |                    
|INTEREST
      INCOME                                            | 
|Interest
      bearing deposits with banks                       |  | $     4,305            |   | $  (8,816          
|Securities
      purchased under agreements to resell            |  | 1,806                  |   | (2,065             
|Loans,
      net                                                 |  | (106,829               | ) | (100,878           
|Impaired
      loans                                             |  | 12,178                 |   | 4,132              
|Investment
      securities                                      |  | (12,785                | ) | (3,670             
|                                                                 |  |                        |   |                    
|TOTAL INCREASE
      (DECREASE)                                  |  | $(101,325              | ) | $(111,297          
|                                                                 |  |                        |   |                    
|INCREASE
      (DECREASE) IN INTEREST 
          EXPENSE         | 
|Deposits                                                         |  | (29,442                | ) | (29,797            
|Short-term
      borrowings and placements                       |  | (19,492                | ) | (36,310            
|Medium-
      and long-term borrowings and 
          placements |  | (6,535                 | ) | (38,136            
|                                                                 |  |                        |   |                    
|Redeemable
      preferred stock                                 |  | 0                      |   | 0                  
|                                                                 |  |                        |   |                    
|TOTAL INCREASE
      (DECREASE)                                  |  | $(55,469               | ) | $(104,243          
|                                                                 |  |                        |   |                    
|INCREASE
      (DECREASE) IN NET 
           INTEREST INCOME     |  | $(45,856               | ) | $  (7,054          
|                                                                 |  |                        |   |                    

Provision for
  Loan Losses

The
Banks provision for loan losses was $77.1 million in 2001, $272.6 million in 2002
and ($69.5) million in 2003. Of the amount for 2003, $62.9 million resulted from the sale
of loans of six Argentine borrowers during the year. The $6.6 million balance related to
an $8.5 million net increase in specific allowances for Argentine borrowers and a net
$15.1 million reduction in other allowances for loan losses, of which approximately $14.0
million was related to Brazil, as a result of that countrys improved situation.

The
higher provisions for loan losses in 2001 were mostly related to the Banks exposure
in Argentina. At the end of 2001, the Bank identified specific Argentine impaired loans
in the amount of $76.1 million in respect of which $16.7 million was allocated to the
allowance for loan losses. The balance of the increase in the provision for loan losses
in 2001 was related to general allowances for loan losses in connection with the rest of
the Banks loan portfolio in Argentina. A prolonged deterioration in Argentinas
economic environment, financial condition and investor confidence resulted in late
December 2001 in a profound crisis, which forced the Argentine government to adopt
stringent measures. These included foreign exchange and deposit controls, bank holidays
and restrictions on the repayment of foreign debt in January 2002. As a result, credit
ratings for



| | 50 | 
| | -- | 



---



Argentina were reduced by the major
rating agencies, which triggered an increase in general allowances for loan losses at the
end of 2001. At December 31, 2001, the general allowance for loan losses amounted to
$159.8 million, of which $85.0 million was allocated to Argentina, $42.9 million to
Brazil, $10.9 million to Venezuela, $10.0 to Mexico and $11.0 million to other countries.

As
discussed in Key InformationRisk Factors, the situation in Argentina
continued to deteriorate during the first half of 2002 and adversely affected the
financial condition of the Banks Argentine obligors, including banks and
corporations, and the quality of the Banks loans to those obligors. As a result of
the Banks concerns about the collectibility of its Argentine loan portfolio, during
the first and second quarters of 2002, after careful consideration, and based upon
rigorous analysis of all the relevant factors and the results of an individual review of
all Argentine clients, the Board of Directors decided to further increase the allowance
for loan losses by $20.0 million and $251.9 million, respectively. The total allowance for
loan losses amounted to $429.7 million at December 31, 2002, of which approximately $365.3
million related to the Banks Argentine impaired loan portfolio of $691.5 million at
December 31, 2002. The remaining balance of $64.4 million represented general allowances,
of which $47.4 million was allocated to Brazil, $8.9 million to Venezuela, $4.0 million to
Ecuador, $0.2 million to Mexico and $3.9 million to other countries.

The
$4.5 million or 10.5% increase in general allowances allocated to Brazil in 2002 compared
to 2001 was the result of the increased risk perception of the country, its political and
financial situation and downgrades in its credit ratings during 2002, the impact of which
was offset in part by the 54% decline in the Banks loan portfolio in Brazil during
2002. The $2.0 million or 18% decline in the general allowances allocated to Venezuela in
2002 compared to 2001 reflects the 38% decline in the Banks loan portfolio in
Venezuela, a country that experienced political and economic difficulties during 2002. The
sharp decline in the general allowances allocated to Mexico in 2002 compared to 2001
reflects the 83% decline in the Banks loan portfolio in Mexico as well as the
upgrade in Mexicos credit rating to investment-grade during 2002.

Commission
  Income

The
following table shows the components of commission income for the periods set forth below:

|                        | For the Year Ended
      December 31,
|----------------------- | -------------------------------------
|
|                        |                                      
|                        |                                      
|Letters of credit       |                                      
|Guarantees:             |                                      
|Other guarantees        |                                      
|Country risk coverage   |                                      
|business                |                                      
|Loans                   |                                      
|                        |                                      
|TOTAL COMMISSION INCOME |                                      
|                        |                                      

The
Banks commission income decreased by 40% from $14.9 million in 2001 to $8.9 million
in 2002 and by an additional 11.6% to $7.9 million in 2003. The decline of $1.0 million in
commission income for 2003, as compared to 2002, resulted mainly from a decrease in the
volume of guarantees issued. The decline of $6.0 million in commission income for 2002, as
compared to 2001, resulted mainly from the Banks decision to de-emphasize its U.S.
commercial paper risk participation and country risk guarantee business and the decrease
in the volume and pricing of letter of credit confirmations.



| | 51 | 
| | -- | 



---



Provision for
  Losses on Off-Balance Sheet Credit Risk

During
2003, the Bank added $10.6 million to the reserve for losses on off balance sheet credit
risk, compared to $6.2 million during 2002. The higher provision for losses on off-balance
sheet credit risk in 2003 reflected a $5.9 million increase in the reserve relating to
off-balance sheet exposure to Argentine banks, with the balance primarily due to increased
exposure in Ecuador.

During
2002, the Bank added $6.2 million to the reserve for losses on off-balance sheet credit
risk, compared to no addition to this reserve during 2001 and $11.2 million during 2000.
The higher provision for off-balance sheet credit risk in 2002 was mostly related to the
Banks exposure in Argentina.

The
reserve for losses on off-balance sheet credit risk reflects the Banks estimate of
probable losses on customers liabilities under acceptances and financial instruments
representing off-balance sheet credit risk to the Bank, such as confirmed letters of
credit, stand-by letters of credit and guarantees, including country risk coverage
guarantees.

The
reclassification of the entire Argentine portfolio as impaired during 2002 resulted in a
$6.2 million net increase in the reserve for losses on off-balance sheet credit risk to
$23.4 million at December 31, 2002, with a total of $14.5 million allocated to
specific impaired items and $8.9 million allocated to the general reserve. This increase
took place despite a nearly 48% drop in non-Argentine customers liabilities under
acceptances and financial instruments with off-balance sheet credit risk exposure that
year.

Derivatives
  and Hedging Activities

During
2003, the Bank incurred a loss of $8 million on derivatives and hedging activities, mostly
related to the Banks decision to unwind interest rate swaps associated with certain
fixed-rate securities. For 2002, the Bank experienced a loss on derivatives and hedging
activities of $341 thousand as compared to income of $7.4 million in 2001. During 2001,
income from derivatives and hedging activities related to the mark-to-market of options
amounted to $4.4 million and declined to $1.2 million in 2002, mostly due to the maturity
of the options in August 2002. The adjustments in fair value of interest rate swaps
amounted to $3.0 million in 2001. Lower interest rates and the expiration of certain
interest rate swaps resulted in adjustments in fair value of interest rate swaps and
forward transactions in the amount of $(1.5) million in 2002. See Note 19 to
Consolidated Financial Statements.

During
2003, the Bank did not enter into new foreign exchange forward contracts or interest rate
swaps transactions, except for hedging small spot foreign exchange transactions.

Impairment
  Loss on Securities

For
the years ended December 31, 2003, 2002 and 2001, impairment losses on securities amounted
to $1.0 million, $44.3 and $40.4 million, respectively. During 2003, the decline in fair
value of investments considered other than temporary was $1.0 million. During 2002,
Argentine securities with a par value of $107.2 million were classified as impaired
and were written down to their estimated fair value, resulting in a charge of $44.3
million to earnings for 2002. During 2001, the Bank classified $50.4 million of Argentine
securities (which are part of the Banks credit portfolio) as impaired. Any security
that declines in value, which is deemed other than a temporary decline, is classified as
impaired. These impaired Argentine securities were written down to their estimated fair
value, resulting in a charge of $40.4 million to earnings in 2001. See Note 6 to the
Consolidated Financial Statements.



| | 52 | 
| | -- | 



---



Gain on the
  Sale of Securities Available for Sale

From
time to time, the Bank purchases debt instruments as part of its credit portfolio lending
activity with the intention of selling them prior to maturity. These debt instruments are
classified as securities available for sale. During 2001, the Bank generated income in the
amount of $4.8 million from the sale of securities available for sale. During 2002, the
market for debt instruments of the Region declined significantly due to the increased risk
perception of the Region. As a result, income from gains on the sale of securities
available for sale declined to $183.6 thousand in 2002. During 2003, the Bank had a $22.2
million gain on the sale of securities available for sale related to the sale of Argentine
securities with a face value of $93.5 million.

Operating Expenses

Operating
expenses were $22.6 million in 2003 compared to $19.3 million in 2002 and $24.0 million in
2001. Total operating expenses increased as a percentage of average total assets from
0.46% in 2002 to 0.86% in 2003, and increased as a percentage of average total assets from
0.40% in 2001 to 0.46% in 2002. The decrease in operating expenses during 2002 was
primarily due to personnel reductions in non-critical areas of the Bank. Core functions
like risk management, compliance, and processing were left untouched or have been
strengthened. No provision for performance-based bonuses for employees was made during
2002. During the year 2002, the Bank continued its policy of investing in technology to
improve its core banking computer application, computer centers, and computer networks.
Additional servers were acquired for information and decision support systems. The
increase in operating expenses during 2003 was partly attributable to an increase in
expenses related to information technology and systems security projects, higher
compensation expenses (including severance costs, restructuring reserves, and higher
performance bonuses) and higher insurance costs.

The
following table shows a breakdown of the components of total operating expenses for the
periods indicated:

|                                       | For the Year Ended
      December 31,
|-------------------------------------- | -------------------------------------
|
|                                       |                                      
|                                       |                                      
|Salaries and other employee expenses   |                                      
|Pre-operating costs                    |                                      
|Depreciation of premises and equipment |                                      
|Professional services                  |                                      
|Maintenance and repairs                |                                      
|Other operating expenses               |                                      
|                                       |                                      
|TOTAL OPERATING EXPENSES               |                                      
|                                       |                                      

Loss from Operations
  and Disposal of Business Segment

During
the second quarter of 2002, the Banks management decided to close its structured
finance unit in New York as part of its restructuring program. In June of 2002, the Board
of Directors approved the closing of this business segment. For the years ended December
31, 2003, 2002 and 2001, costs related to the disposal of this segment and the resulting
operational losses totaled $0.0 million, $2.3 million (of which $1.5 million related to
disposal of the unit) and $2.4 million, respectively.

Net Income

The
Bank had net income of $111.5 million in 2003 compared with a net loss of $268.8 million
in 2002 and net income of $2.5 million in 2001. The Banks 2003 net income reflected
the growth of its core business as well as the improving liquidity and value of its
Argentine portfolio. The Bank sold Argentine obligations with a



| | 53 | 
| | -- | 



---



face value of $308 million, which
resulted in reversals of the allowance for credit losses of $62.6 million and gains on
the sale of securities of $22.2 million. During 2003, 2002 and 2001, the Banks
results were affected by charges of $(69.5) million, $272.6 million and $77.1 million,
respectively, representing provisions (or reversal of provisions) for loan losses, and
$1.0 million, $44.3 million and $40.4 million, respectively, representing impairment loss
on certain securities with Argentine exposure.

Changes
  in Financial Condition

Total
assets were $2.6 billion at December 31, 2003 compared to $2.9 billion at December
31, 2002 and $5.9 billion at December 31, 2001. The following table summarizes changes in
components on the Banks balance sheet at the dates indicated below:

|                                                          | At December 31,
|--------------------------------------------------------- | ---------------
|
|                                                          |                
|ASSETS                                                    |                
|Cash and due from banks                                   |                
|Interest-bearing deposits with banks                      |                
|Securities purchased under agreements to resell           |                
|Investment securities                                     |                
|Loans                                                     |                
|Less:                                                     |                
|Allowance for loan losses                                 |                
|Unearned income                                           |                
|                                                          |                
|Loans, net                                                |                
|                                                          |                
|Customers liabilities under acceptances                  |                
|Premises and equipment                                    |                
|Accrued interest receivable                               |                
|Derivative financial instruments-assets                   |                
|Other assets                                              |                
|                                                          |                
|TOTAL ASSETS                                              |                
|                                                          |                
|LIABILITIES AND STOCKHOLDERS EQUITY                      |                
|Deposits                                                  |                
|Short-term borrowings and placements                      |                
|Medium and long-term borrowings and placements            |                
|Acceptances outstanding                                   |                
|Accrued interest payable                                  |                
|Derivative financial instruments-liabilities              |                
|Reserve for losses on off-balance sheet credit
      risk |                
|Redeemable preferred stock                                |                
|Other liabilities                                         |                
|                                                          |                
|TOTAL LIABILITIES                                         |                
|                                                          |                
|Redeemable preferred stock (1)                            |                
|                                                          |                
|STOCKHOLDERS EQUITY                                      |                
|Common stock, no par value                                |                
|Treasury stock                                            |                
|Capital surplus                                           |                
|Capital reserves                                          |                
|Accumulated other comprehensive loss                      |                
|Retained earnings                                         |                
|                                                          |                
|TOTAL STOCKHOLDERS EQUITY                                |                
|                                                          |                
|TOTAL LIABILITIES AND
          STOCKHOLDERS EQUITY      |                
|                                                          |                

(1) SFAS 150 which required
  the inclusion of redeemable preferred stock as part of the other liability
  line item was effective as of July 1, 2003.



| | 54 | 
| | -- | 



---



Interest-Bearing Deposits
  with Banks

At
December 31, 2003, interest-bearing deposits with banks amounted to $253.9 million. These
deposits represented 9.9% of total assets at December 31, 2003, compared to 16.5% at
December 31, 2002 and compared to 9.5% at December 31, 2001. The Banks
interest-bearing deposits amounted to $483.4 million at December 31, 2002, compared to
$562.7 million at December 31, 2001. At December 31, 2003, interest-bearing deposits as a
percentage of total deposits taken was 36.1%, compared to 87.6% at December 31, 2002, and
35.8% at December 31, 2001.

Investment
  Securities

At
December 31, 2003, 100% of investment securities represented securities purchased as part
of the Banks credit portfolio lending policy and were recorded at market value.
Investment securities amounted to $77.8 million at December 31, 2003, compared to
$160.7 million at December 31, 2002 and $356.1 million at December 31, 2001. The decline
in investment securities during 2003 resulted mainly from the redemption of securities
available for sale and the sale of Argentine securities. The decline in investment
securities during 2002 was the result of the Banks decision to: (i) maintain an
adequate level of capitalization following Argentine provisions and charges, (ii) reduce
credit exposure commensurate with increasing risk levels in some countries in the Region,
and (iii) adjust the balance sheet to smaller funding levels. The reductions were
implemented partly through repayments on these securities and were partly the result of
the lower market valuation of Argentine securities.

Loans

At
December 31, 2003, loans amounted to $2.3 billion compared to $2.5 billion at
December 31, 2002 and $4.7 billion at December 31, 2001. The decline in loans during
2003 was mainly attributable to the sale of Argentine loans, collections of loan principal
and the reduction of credit exposure commensurate with increasing risk levels in some
countries in the Region, such as The Dominican Republic and Venezuela. The decline in
loans during 2002 was the result of the Banks decision to: (i) maintain an
adequate level of capital ratios following Argentine provisions and charges, (ii) reduce
credit exposure commensurate with increasing risk levels in some countries in the Region,
and (iii) adjust the balance sheet to smaller funding levels. The reductions were
implemented primarily through loan repayments.

Allowance for
  Loan Losses

During
2002, given the further deterioration of the situation in Argentina, the Banks Board
of Directors and management determined to increase the allowance for loan losses by $272.6
million and charged off loans of $20.6 million, making the total allowance for loan
losses $429.7 million at December 31, 2002, of which $365.3 million was allocated to
Argentine impaired loans. During 2003, the allowance for loan losses decreased by $205.4
million to $224.3 million, primarily as a result of a $190.3 million reduction in the
allowance for Argentine loans resulting from asset sales, repayments and $22.8 million in
charge-offs.



| | 55 | 
| | -- | 



---



Critical Accounting
Policies

The
Bank believes that the following critical accounting policies involve its more significant
judgments and estimates used in the preparation of its Consolidated Financial Statements:

Allowance for
  Loan Losses

The
allowance for loan losses covers the credit risk on loans and is maintained at a level
that is adequate in managements judgment to provide for estimated probable loan
losses inherent in the Banks loan portfolio.

The
allowance for credit losses consists of two elements. One element represents the aggregate
of estimated losses on the Banks individual impaired loans and contingencies. The
second element represents a general allowance for probable losses on the entire credit
portfolio of the Bank net of specific impaired credits.

The
Bank estimates a specific allowance for loan losses resulting from an impaired loan by
comparing the net present value of the expected cash flows from the loan discounted at the
effective interest rate of the loan and the carrying value of the loan.

Additionally,
for the rest of the loan portfolio the Bank maintains a general loan loss allowance, which
is estimated using a provisioning matrix model. This provisioning matrix model
differentiates the risk into three categories and aggregates the sum of the following
three factors: country risk, borrower risk and transaction type risk. To determine the
probability of loss due to country risk, the Bank uses sovereign ratings of well-known
independent rating agencies. For the borrower risk category, the Bank uses its own
numerical credit ratings, which it converts to the rating agency equivalent in order to
apply the probability of default matrix. The Bank evaluates the transaction risk mainly by
taking into account whether the risk is a trade transaction or otherwise. This model is a
tool to estimate and validate the levels of reserves required, since it does not take into
consideration all variables affecting asset quality. Therefore, the Bank also reviews the
adequacy of reserves, taking into account regional political, financial and economic
trends affecting the portfolio, delinquency trends, volatility and significant
concentrations that are not fully reflected in the model, in order to determine whether
any adjustments to the model are warranted. See Information on the
CompanyBusiness OverviewAsset QualityAllowance for Credit Losses.
Although the Bank believes that its allowance for loan losses will be adequate to cover
all expected losses in its credit portfolio and is in accordance with U.S. generally
accepted accounting principles, there can be no assurance that the allowance will be
adequate to cover any further increase in the amount of impaired loans or any further
deterioration in its impaired loan portfolio or that the use of other different estimates
and assumptions could produce different allowances, and amendments to the allowances may
be required in the future, as a consequence of economic events.

Other than
  Temporary Impairment on Securities

A
decline in value of a security is deemed other than temporary when, among other things,
the decline in fair value has been, in the judgment of management, for an extended period
of time and/or the payment of interest and principal are past due. In these cases, the
carrying value of the security is written down to its estimated fair value through a
charge against earnings, characterized as impairment loss on securities. Premiums and
discounts are amortized or credited over the life of the related security as an adjustment
to yield using a method that approximates the method used for interest.

Fair Value
  of Financial Instruments

Under
U.S. GAAP, financial instruments, when required, are stated at fair value. Fair values
are based on quoted market prices or, if not available, on internal developed models
based on available information. However, market information is often limited or even not
available. In that case, the Banks management applies judgment. Other factors that
could affect estimates as well are incorrect model assumptions, market dislocations and



| | 56 | 
| | -- | 



---



unexpected correlation.
Notwithstanding the judgment required in fair valuing, the Bank believes that its
estimates are adequate. However, the use of different models or assumptions could result
in changes in the Banks reported results.

New Accounting
Standards

In
July 1, 2003, the Financial Accounting Standard Board (FASB) issued SFAS No.
150 (Accounting for Certain Financial Instruments with Characteristics of Both Liabilities
and Equity). SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of liabilities and equity. It requires
that an issuer classify a financial instrument that is within its scope as a liability,
because that financial instrument embodies an obligation of the issuer. SFAS No. 150
became effective for financial instruments entered into or modified after May 31, 2003,
and otherwise was effective at the beginning of the first interim period beginning after
June 15, 2003. This adoption required the reclassification of the Banks redeemable
preferred stock as a liability on the Banks consolidated balance sheet.

In
January 2003, the FASB issued Interpretation No. 46 (Consolidation of Variable
Interest Entities  an Interpretation of Accounting Research Bulletin No. 51)
(FIN 46). According to FIN 46, consolidation may be required when a variable
interest entity cannot finance its activities without some kind of special arrangement. In
general, a variable interest entity is an entity used for business purposes that either
(a) does not have equity investors with voting rights or (b) has equity
investors that do not provide sufficient financial resources for the entity to support its
activities. FIN 46 also adds disclosure requirements for certain variable interest
entities that may not need to be consolidated. The disclosure requirements apply to all
financial statements issued after January 31, 2003. FIN 46 does not currently apply
to the Bank since all of the Banks subsidiaries have been consolidated in the
Consolidated Financial Statements.

5.B
  Liquidity and Capital Resources

It
is anticipated that with a return to regional market stability, the recent increase in the
Banks capital and an increase in lending activity, the level of liquid assets
compared to liabilities will be reduced over time to more historical levels. Additionally,
it will be an objective of the Bank to return to its traditional mix of funding, although
at an expected higher cost. However, it is anticipated that during 2004, equity will play
a somewhat larger role in the mix, and possibly there will be an increase in off-balance
sheet financial arrangements. Careful attention will be paid to the mix, cost, gap, and
risk in the Banks treasury management.

Liquidity

Liquidity
refers to the Banks ability to maintain adequate cash flows to fund operations and
meet obligations and other commitments on a timely basis. The Bank maintains its liquid
assets in demand deposits, overnight funds and time deposits with well-known international
banks. These liquid assets are adequate to cover 24-hour deposits from customers, which
theoretically could be withdrawn on the same day. At December 31, 2003, the Banks
24-hour deposits from customers (overnight deposits, demand deposit accounts and call
deposits) amounted to $54.3 million, representing 7.7% of total deposits. Also, the
Bank had approximately $51.5 million to $78.6 million of time deposits maturing
daily. The liquidity requirement resulting from these maturities is met by the Banks
liquid assets, which at December 31, 2003, were $252.6 million (representing 35.9% of
total deposits), and by daily maturities of approximately $109.5 million to
$146.9 million in the Banks loan portfolio.

The
Banks overall objective is to have a minimum of 50% of its liquidity position
represented by demand, call accounts and time deposits with maturities of less than one
week or invested in overnight deposits with the balance invested in (i) short-term time
deposits with maturities of up to six months, (ii) investment funds or (iii) negotiable
money market instruments, such as Euro certificates of deposit, commercial paper, bankers acceptances
and other liquid instruments with maturities of up to 180 days. These instruments must be
of



| | 57 | 
| | -- | 



---



investment grade quality (carrying
two of the following ratings: A-1, P-1 or F-1 from Standard & Poors, Moodys
or Fitch, respectively) and must have a liquid secondary market. Interbank deposits are
placed with reputable international banks, which are considered by management to be of
high quality, and are located outside of the Region. These banks must have a
correspondent relationship with the Bank and be approved by the Board of Directors on an
annual basis. The primary objectives for the investment of the Banks liquidity
funds are security and convertibility and the secondary objective is yield. In order to
manage its liquidity needs and risks, the Banks liquidity position is reviewed and
monitored on a daily basis by management.

The
following table shows the Banks liquid assets, which consist of short-term funds
deposited with other banks broken down by principal geographic area at the dates indicated
below:

|              | At December 31,
|------------- | ---------------
|
|              |                
|Europe        |                
|United States |                
|Other O.E.C.D |                
|              |                
|Total         |                
|              |                

The
Banks loan and investment portfolio is primarily short-term. At December 31, 2001,
2002 and 2003, 61%, 79.5% and 93.9%, respectively, of the Banks loan and investment
portfolio (loans plus selected investment securities held to maturity and available for
sale plus securities purchased under agreements to resell, excluding Argentine impaired
loans and impaired securities) had an average term left to maturity of 365 days or less.
While the Banks liabilities generally mature over shorter periods than its assets,
requiring the Bank to renew or create new liabilities at current interest rates, the
associated risk is diminished by the short-term nature of the loan portfolio. At December
31, 2003, $240.1 million of the loan and investment portfolio (excluding impaired
loans and impaired securities) (11.8% of the total) matured within 30 days,
$835.5 million (41.2% of the total loan and investment portfolio) matured within 90
days, $1,466.0 million (72.3% of the total loan and investment portfolio) matured
within 180 days and $1,904.2 million (93.9% of the total loan and investment
portfolio) matured within one year. At December 31, 2003, the average original term to
maturity of the Banks short-term loan portfolio (excluding impaired loans and
impaired securities) was approximately 208 days.

At
December 31, 2003, the Banks cumulative maturity gap for the subsequent six-month
period was positive. This means that the Bank has sufficient asset maturities in the next
six months to cover the maturity of its liabilities. In determining its cumulative
maturity gap, the Bank assumes a five-year maturity for its Argentine obligations
regardless of the actual maturity date. The Banks management believes that the
orderly reduction of its balance sheet by approximately $3.4 billion during the years
2002 and 2003 reflects the matched nature of its asset and liability structure, as well as
the quality and nature of its loan portfolio outside Argentina.

Funding
  Sources

The
Banks principal sources of funds are deposits, borrowed funds and floating and
fixed rate placements. While these sources are expected to continue to provide most of
the funds needed by the Bank in the future, their mix, as well as the possible use of
other sources of funds, will depend upon future economic and market conditions. On June
12, 2003 the Bank signed a $125.0 million Stand By Loan Agreement with the International
Finance Corporation (IFC), an affiliate of the World Bank, and on September
23, 2003 a $40.0 million five year Medium Term Loan Agreement with the public sector
development agencies from Germany (DEG) and The Netherlands (FMO). The proceeds of the
$40.0 million loan agreement with DEG and FMO are to be used in the refinancing of
foreign trade by local banks and key export-oriented companies in the Region, and to
partially fund the restructuring of the Banks Argentine portfolio. The facility was
fully drawn on January 2004. The $125.0 million stand-by agreement contract with IFC was
signed to fund trade finance activities in the Latin



| | 58 | 
| | -- | 



---



America Region, marking the Banks
return to medium term funding markets after more than a year. In February 2004, the Bank
decided to cancel the unused facility due to the recovery of the risk perception of the
Region.

At
December 31, 2001, 2002 and 2003, short- and medium-term borrowings and placements
represented 68.0%, 74.7% and 59.3%, respectively, of total liabilities. Short- and
medium-term borrowings and placements were important sources of funding for the
Banks loan portfolio because they permitted the Bank to diversify its sources of
funding outside of the Region, and because the Bank utilized these borrowings and
placements, which generally had longer maturities than deposits, to help manage its asset
and liability positions. The Bank also relies mostly upon inter-bank deposits for funding,
which at December 31, 2001, 2002 and 2003 represented 29.6%, 21.3% and 35.5%,
respectively, of total liabilities.

Funds
raised by the Bank have historically been used primarily to provide trade-related loans to
its customers. In 2001, loans plus selected investments held as part of the credit
portfolio plus securities purchased under agreements to resell increased by $52.8 million
and decreased by $2.6 billion and $324.4 million during 2002 and 2003, respectively.
A portion of the funds raised is used to maintain liquidity held in cash and due from
banks and interest bearing-deposits in other banks, which at December 31, 2001, 2002 and
2003 totaled $558.7 million, $479.3 million and $252.6 million, respectively.

Deposits

The
Bank obtains deposits principally from central and commercial banks in the Region. At
December 31, 2003, approximately 44.2% of the deposits held by the Bank were deposits made
by central banks of countries in the Region. Many of these banks deposit a portion of
their dollar reserves with the Bank. The average term remaining to maturity of deposits
from central banks of countries in the Region at December 31, 2003 was 27 days
as compared to 15 days at December 31, 2002. The bulk of the Banks remaining
deposits is obtained primarily from commercial banks located in the Region. At December
31, 2003, deposits from the Banks five largest depositors, of which three were
central banks in the Region, represented 56.6% of the Banks total deposits.

During
2002, deposits declined by 64.9% ($1.0 billion) to a total of $552.0 million at December
31, 2002. The decline in deposits during 2002 was mostly due to credit rating downgrades
and the challenging operating environment. Although the deposit reduction resulted in
higher overall funding costs, it changed the liability mix of the Bank so that average
maturities were lengthened and volatility reduced. During this period, the Bank was able
to reduce its loan portfolio while maintaining a high level of liquid assets. During 2003,
deposits increased by 27.4% or $151.0 million, to a total of $703.0 million at December
31, 2003. The increase in deposits during 2003 reflects the improved perception of the
Bank in the market. At December 31, 2003, approximately 98.6% of the Banks deposits
are scheduled to mature within 12 months. The Bank believes that its deposit levels have
stabilized and that it should not have any difficulty in rolling over these funds, and in
fact increasing its deposit levels, during 2004. At March 31, 2004, total deposits
increased to $719.1 million. However, if continuing or increased economic difficulties in
the Region result in a decline in the Banks deposits, the Bank believes that it has
adequate liquidity (representing 35.9% of total deposits) to fund any such decline.

The
principal components of the Banks customer deposits are demand and time deposits.
The following table analyzes the Banks deposits by country at December 31 of each
year set forth below:

|          | At December 31,
|--------- | ---------------
|
|          |                
|          |                
|Argentina |                
|Barbados  |                
|Bolivia   |                
|Brazil    |                



| | 59 | 
| | -- | 



---



|                       | At December 31,
|---------------------- | ---------------
|
|                       |                
|                       |                
|Chile                  |                
|Colombia               |                
|Costa Rica             |                
|Dominican Republic     |                
|Ecuador                |                
|El Salvador            |                
|France                 |                
|Germany                |                
|Guatemala              |                
|Haiti                  |                
|Honduras               |                
|Italy                  |                
|Jamaica                |                
|Mexico                 |                
|The Netherlands        |                
|Nicaragua              |                
|Panama                 |                
|Paraguay               |                
|Peru                   |                
|Spain                  |                
|Trinidad and Tobago    |                
|United States          |                
|Uruguay                |                
|Venezuela              |                
|Regional Organizations |                
|                       |                
|Total                  |                
|                       |                

Short-Term
  Borrowings and Placements

As
of December 31, 2003, the Bank had short-term borrowings outstanding of
$687.2 million compared to $647.3 million at December 31, 2002 and $1.8 billion at
December 31, 2001. The decline in short-term borrowings during 2002 was mostly due to the
fact that credit flows to the Region began to decrease significantly followed by the
withdrawal of many international banks from lending in the Region and the Banks
rating downgrades. The Banks short-term borrowings consist of borrowings from banks
and have maturities of up to 365 days. These borrowings are made available to the Bank on
an uncommitted basis for the financing of trade-related loans. These short-term borrowings
from banks are provided by approximately 56 European and North American banks.

The
average term remaining to maturity of short-term borrowings at December 31, 2003 was
approximately 121 days. At December 31, 2003, 10.8% of all short-term borrowings were
due within 30 days, 40.1% were due within 31-90 days, 30.6% were due within 91-180 days
and the balance were due prior to the end of 2004. The Banks short-term borrowings
provided matched funding for 27.7% of the Banks total loan portfolio (loans plus
selected investments plus securities purchased under agreements to resell), and played an
important role in controlling the gap between assets and liabilities and in helping to
minimize the impact of short-term interest rate fluctuations.

From
time to time, the Bank also makes short-term placements under its Euro-Commercial Paper
and Certificate of Deposit Program. The maximum amount of notes and certificates of
deposit authorized to be issued under this program is $750 million and the maximum term
of the notes and certificates of deposit issued



| | 60 | 
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---



thereunder is 365 days. Notes issued
at a discount and interest-bearing certificates of deposit may both be issued under this
program in various hard currencies. There are no amounts outstanding under this program
due primarily to current market conditions, which have made it difficult for Latin
American obligors to access the capital markets. Short-term placements also include
floating and fixed rate notes with maturities of up to 365 days issued under the Banks
EMTN Program. The maximum amount of notes authorized to be issued under this program is
$2.25 billion. See  Medium and Long-Term Floating and Fixed Rate Placements.

The
following table presents information regarding the amounts outstanding under, and interest
rates on, the Banks short-term borrowings and placements at the dates and during the
periods indicated:

|                                                  | At and for the Year Ended December 31,
|------------------------------------------------- | --------------------------------------
|
|                                                  |                                       
|Maximum amount outstanding at any
      month end |                                       
|Amount outstanding at year end                    |                                       
|Average amount outstanding                        |                                       
|Weighted average interest rate on average         |                                       
|amount outstanding                                |                                       
|Weighted average interest rate on amount          |                                       
|outstanding at year end                           |                                       

Medium- and
  Long-Term Borrowings and Placements

During
2002, most of the markets for medium- and long-term borrowings and placements remained
virtually closed to issuers of the Region, including the Bank. As a result, medium-term
and long-term obligations declined $501.7 million in 2002 to $1.3 billion at
December 31, 2002 and declined $800.0 million in 2003 to $485.5 million at
December 31, 2003.

At
December 31, 2003, the Bank had $368 million of medium-term and long-term borrowings
from various international banks. The interest rates on most medium and long-term
borrowings are adjusted semi-annually using six-month LIBOR plus a credit spread. The Bank
uses these funds to finance its medium-term loan portfolio. The average term remaining to
maturity of the Banks medium and long-term debt is 1.2 years.

The
Banks EMTN Program has a maximum limit of $2.25 billion. Notes issued under the EMTN
Program are placed in Asia, Europe and North America, in either the Euro or Regulation S
or 144A markets, and are general obligations of the Bank. The EMTN Program may be used to
issue notes with maturities ranging from 90 days up to a maximum of 30 years, at fixed or
floating interest rates and in various hard currencies. The sale of notes issued under the
EMTN Program is generally made through one or more authorized financial institutions. The
Bank has not actively used the EMTN Program in the past two years due to current market
conditions, which have made it difficult for Latin American obligors to access the debt
capital markets, and also given the Banks focus on providing short-term trade
financing.

As
of December 31, 2003, the total amount outstanding under this program with medium-term
maturities was $117.9 million, of which $79.0 million was at floating interest
rates and $38.9 million at fixed interest rates. The interest rate on all currently
outstanding floating rate notes issued under the EMTN Program is adjusted quarterly or
semi-annually using the applicable LIBOR rate. The weighted average interest cost of these
placements at the end of 2003 was 2.1%, and the placements had final maturities in 2004
through 2006. As of December 31, 2003, the weighted average interest cost of the
Banks fixed rate placements under the EMTN Program was 5.6% and the placements had
final maturities in 2004 through 2005. As part of its interest rate and currency risk
management, the Bank enters into foreign exchange forward and cross currency contracts and
interest rate swaps to hedge the risk associated with a portion of the notes issued under
its EMTN Program. See Quantitative and Qualitative Disclosure About Market
Risk.



| | 61 | 
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Cost and Maturity
  Profile of Borrowed Funds and Floating and Fixed Rate Placements

The
following table sets forth certain information regarding the weighted average cost and the
remaining maturities of the Banks borrowed funds and floating and fixed rate
placements at December 31, 2003:

|                                            | Amount | Weighted
      Average Cost
|------------------------------------------- | ------ | ---------------------------
|                                            |        | (in $ millions)            
|Short-Term Borrowings & Placements          |        |                            
|Due in 0 to 30 days                         |        | $      73                  
|Due in 31 to 90 days                        |        | 275                        
|Due in 91 to 180 days                       |        | 210                        
|Due in 181 to 365 days                      |        | 127                        
|                                            |        |                            
|Total                                       |        | $    687                   
|Medium and Long-Term Borrowings             |       
|Due in 0 to 30 days                         |        | $      17                  
|Due in 31 to 90 days                        |        | 78                         
|Due in 91 to 180 days                       |        | 45                         
|Due in 181 to 365 days                      |        | 60                         
|Due in 1 through 5 years                    |        | 166                        
|                                            |        |                            
|Total                                       |        | $    367                   
|Medium & Long-Term Fixed Rate Placements    |       
|Due in 0 to 30 days                         |        | $      18                  
|Due in 1 through 5 years                    |        | 21                         
|                                            |        |                            
|Total                                       |        | $      39                  
|Medium & Long-Term Floating Rate Placements |       
|Due in 0 to 30 days                         |       
|Due in 31 to 90 days                        |        | $       5                  
|Due in 91 to 180 days                       |        | 20                         
|Due in 181 to 365 days                      |        | 14                         
|Due in 1 through 5 years                    |        | 39                         
|                                            |        |                            
|Total                                       |        | $      78                  

* This corresponds to fixed rate
interest-bearing liabilities incurred to fund fixed rate interest-earning assets
outstanding under the Banks medium term interest rate gap policy. These liabilities
were incurred at a total interest rate lower than the related assets funded. The Banks
policy with respect to medium term interest rate gap provides that the Bank is to match
fund a minimum of 85% of fixed rate interest-earning assets over 365 days with similar
liabilities.

Asset/Liability
  Management

The
Bank seeks to manage its assets and liabilities to reduce the potential adverse impact on
net interest income that could result from changes in interest rates. Risk control on
interest rates is conducted through systematic monitoring of maturity mis-matches. The
Banks investment decision-making takes into account not only the rates of return and
their underlying degree of risk, but also liquidity requirements, including minimum cash
reserves, withdrawal and maturity of deposits and additional demand for funds. For any
given period, a matched pricing structure exists when an equal amount of assets and
liabilities are repriced. An excess of assets or liabilities over these matched items
results in a gap or mis-match, as shown in the table under Interest Rate
Sensitivity below. A negative gap denotes liability sensitivity and normally means
that a decline in interest rates would have a positive effect on net interest income,
while an increase in interest rates would have a negative effect on net interest income.
Substantially all of the Banks assets and liabilities are denominated in dollars
and, therefore, the Bank has no material foreign exchange risk.



| | 62 | 
| | -- | 



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Interest Rate
  Sensitivity

The
following table presents the projected maturities and interest rate adjustment periods of
the Banks assets, liabilities and stockholders equity based upon the
contractual maturities and adjustment dates at December 31, 2003. The interest-earning
assets and interest-bearing liabilities of the Bank and the related interest rate
sensitivity gap given in the following table may not be reflective of positions in
subsequent periods.

|                                                                  | Total | 0-30 Days                           | 31-90 Days | 91-180 Days | 181-365 Days | More than
      365 Days | Past Due | Non-Interest
      Sensitive
|----------------------------------------------------------------- | ----- | ----------------------------------- | ---------- | ----------- | ------------ | ------------------------ | -------- | ----------------------------
|                                                                  |       | (in $ millions, except percentages)
|Interest-earning assets                                           |       |                                     |            |             |              |                          |          |                             
|Cash and due from banks                                           |       | $           0                       | .9         | $       0   | .0           | $          0             | .0       | $       0                   
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Interest-bearing deposits with                                    |       |                                     |            |             |              |                          |          |                             
|banks                                                             |       | 253                                 | .9         | 225         | .1           | 28                       | .8       | 0                           
|Securities purchased under                                        |       |                                     |            |             |              |                          |          |                             
|agreements to
      resell                                        |       | 132                                 | .0         | 0           | .0           | 132                      | .0       | 0                           
|Investment securities                                             |       | 77                                  | .8         | 0           | .0           | 0                        | .0       | 1                           
|Loans, net                                                        |       | 2,046                               | .4         | 437         | .7           | 861                      | .7       | 777                         
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Total interest-earning assets                                     |       | 2,511                               | .0         | 662         | .8           | 1,022                    | .6       | 778                         
|Non-interest earning assets                                       |       | 44                                  | .1         | 0           | .0           | 0                        | .0       | 0                           
|Other assets                                                      |       | 8                                   | .5         | 0           | .0           | 0                        | .0       | 0                           
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Total assets                                                      |       | $    2,563                          | .6         | $    662    | .8           | $   1,022                | .6       | $    778                    
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Interest-bearing liabilities                                      |       |                                     |            |             |              |                          |          |                             
|Deposits                                                          |       |                                     |            |             |              |                          |          |                             
|Demand                                                            |       | $          19                       | .4         | $      19   | .4           | $          0             | .0       | $       0                   
|Time                                                              |       | 683                                 | .6         | 497         | .7           | 161                      | .4       | 19                          
|Short-term borrowings and                                         |       |                                     |            |             |              |                          |          |                             
|placements                                                        |       | 687                                 | .2         | 88          | .5           | 275                      | .5       | 195                         
|Medium- and long-term                                             |      
|borrowings and
      placements                                   |       | 485                                 | .5         | 110         | .5           | 201                      | .8       | 145                         
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Total interest-bearing                                            |       |                                     |            |             |              |                          |          |                             
|liabilities                                                       |       | 1,875                               | .7         | 716         | .1           | 638                      | .7       | 360                         
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Non-interest-bearing liabilities                                  |       | 103                                 | .5         | 0           | .0           | 0                        | .0       | 0                           
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Total Liabilities                                                 |       | 1,979                               | .2         | 716         | .1           | 638                      | .7       | 360                         
|Redeemable Preferred Stock                                        |       | 0                                   | .0         | 0           | .0           | 0                        | .0       | 0                           
|Stockholders Equity                                              |       | 584                                 | .3         | 0           | .0           | 0                        | .0       | 0                           
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Total Liabilities and                                             |       |                                     |            |             |              |                          |          |                             
|Stockholders
      Equity                                        |       | $    2,563                          | .6         | $    716    | .1           | $       638              | .7       | $    360                    
|                                                                  |       |                                     |            |             |              |                          |          |                             
|Interest rate sensitivity gap                                     |       |                                     |            | (53         | .3)          | 383                      | .9       | 418                         
|Cumulative interest rate
           sensitivity gap               |       |                                     |            | (53         | .3)          | 330                      | .6       | 748                         
|Cumulative gap as a % of total
           interest-earning assets |       |                                     |            | (2          | .1)%         | 13                       | .2%      | 29                          

Until
recently, the Banks interest rate risk arose from the Banks liability
sensitive position in the short-term, which means that the Banks interest-bearing
liabilities reprice more quickly than the Banks interest-earning assets. In this
position, there is a potential adverse impact on the Banks net interest income that
might result from increases in interest rates. During 2002 and 2003, the Bank took several
steps to reduce the mismatch between assets and liabilities, including an increase in its
net cash position and a change in the mix of its liabilities. As a result, at December 31,
2002, the Banks cumulative interest rate gap for the subsequent three months was
positive. Following December 31, 2003 the Banks cumulative interest rate gap
was negative for only the first 30 days. By March 31, 2004, the interest rate gap position
had reversed to asset sensitive, which means that assets reprice faster than liabilities
and that the Bank would benefit from an increasing interest rate environment. The
Banks interest rate risk is managed by attempting to match the term and repricing
characteristics of the Banks interest rate sensitive assets and liabilities. The
Banks policy with respect to interest rate gaps also provides that the Bank is to
match fund interest-earning assets over 365 days, depending on its interest rate basis: If
it is floating rate, it has to be matched funded at a 60% minimum, and if it is fixed
rate, it has to be matched funded at an 85% minimum. The Banks policy with respect
to interest rate gaps also provides that the Bank is to match fund interest-earning assets
over 365 days. The Bank also uses interest rate swaps on a limited basis as part of its
interest rate risk management. These interest rate swaps are made either in a single
currency or cross-currency for a prescribed period to exchange a series of interest rate
flows, which involve fixed for floating rate interest payments or vice versa.



| | 63 | 
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StockholdersEquity

At
December 31, 2003, the Banks total stockholders equity was $584.3 million
compared to $328.9 million at December 31, 2002 and $598.4 million at December 31,
2001, representing 22.8%, 11.2% and 10.1%, respectively, of the Banks total assets.

The
following table presents information concerning the Banks capital position at the
dates indicated below:

|                                                                | At December 31,
|--------------------------------------------------------------- | ---------------
|
|                                                                |                
|Redeemable Preferred Stock (1)                                  |                
|                                                                |                
|Common Stock                                                    |                
|Treasury Stock                                                  |                
|Capital Surplus                                                 |                
|Capital Reserves                                                |                
|Other Comprehensive Income                                      |                
|Retained Earnings                                               |                
|Total Stockholders
      Equity                                |                
|                                                                |                
|Total Stockholders
      Equity and Redeemable Preferred Stock |                
|                                                                |                

---

(1)              SFAS
150 regarding the inclusion of redeemable preferred stock as part of the           other
liabilities line item was effective as of July 1, 2003.

In
view of the impact of the Argentine crisison the Bank, the Board of Directors of
the Bank and its management developed a re-capitalization plan, which was implemented
during 2003. After the increase in reserves related to Argentina, in June 2002, it was
determined that BLADEX had to regain its strong capitalization, and that it was neither
prudent nor convenient to achieve it gradually through the accumulation of retained
earnings. The Board of Directors believed that it was necessary to raise a minimum of $100
million of Tier 1 capital through the offering and sale of additional common shares at a
price at or near the market price of the Class E shares at the time of the offering. This
decision was made to provide the Bank with the necessary capital to continue operating
profitably in a manner consistent with the long-term best interests of the Banks
shareholders, to allow the Bank to retain its investment-grade credit ratings and continue
to fulfill, in a significant way, its primary role of providing trade financing to
borrowers in Latin America. The Bank chose to offer 22 million shares in order to provide
a cushion so that if the Banks share price declined substantially, it would be still
able to raise its target $100 million. In order to address a potential ownership dilution,
the Bank raised the needed capital through a rights offering to the Banks common
stockholders, pursuant to which each stockholder was given the opportunity to subscribe,
on a pro rata basis, for a portion of the shares being offered. In order to provide
assurance that the Bank would be able to raise the required equity capital, the Bank
received stand by commitments for an aggregate of over $100 million from a group of
existing Class A and Class B shareholders and a small number of other institutions,
including multilateral organizations such as the International Finance Corporation of the
World Bank (IFC) to purchase, for investment purposes, shares that were offered to
existing shareholders in the rights offering, but were not subscribed. On June 27, 2003,
the Bank completed the capitalization process, raising $147.0 million at $6.68 per share.
The Bank received subscriptions for a total of 23.2 million common shares, and the entire
22 million issue of new shares was subscribed by existing shareholders. Following the
capitalization, the Banks shareholding composition was 16.1% Class A shares, 10.4%
Class B shares, and 73.5% Class E shares representing a total of 39.3 million shares,
compared to a pre-capitalization shareholding composition of 28.3% Class A shares, 19.9%
Class B shares and 51.8% Class E shares representing a total of 17.3 million shares as of
March 31, 2003.



| | 64 | 
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---



Capital
reserves are established by the Bank from retained earnings and are a form of retained
earnings according to Panamanian banking regulations. The objective of capital reserves is
to strengthen the capital position of the Bank, as reductions of these reserves, for
example to pay dividends, require the approval of the Board of Directors of the Bank and
Panamanian banking authorities. Panamanian banking regulations do not require the Bank to
maintain any particular level of capital reserves. Effective on June 30, 2002, the
Bank transferred $210 million to retained earnings from the capital reserves account in
order to cover the loss resulting from the $278.8 million provision for credit loss
provision charges taken in 2002.

At
December 31, 2003, capital ratio of total stockholders equity to total assets was
22.8%. Although the Bank is not subject to the capital adequacy requirements of the United
States Board of Governors of the Federal Reserve System (the Federal Reserve
Board) if the Federal Reserve Boards fully phased in risk-based capital
guidelines had been applicable to the Bank, management believes that as of December 31,
2003 the Bank would have exceeded all applicable capital adequacy requirements. At
December 31, 2003, the Banks Tier 1 and total capital ratios calculated according to
these guidelines were 35.4% and 36.7%, respectively. The Banking Law (as defined under
Information on the CompanyBusiness OverviewRegulation) in Panama,
which became effective on June 12, 1998, requires the Bank to maintain a minimum total
capital to risk-weighted asset ratio of 8% (each, as defined in the Banking Law). At
December 31, 2003, the Banks total capital to risk-weighted asset ratio, calculated
according to the guidelines of the Banking Law, was 27.1%. See Information on the
CompanyBusiness OverviewRegulationPanamanian Law.

5.C
  Research and Development, Patents and Licenses, etc.

Not
applicable

5.D
  Trend Information

Adverse
U.S. and global economic conditions during 2001 and 2002 affected economic conditions in
the Region. Because the United States and Europe are the principal export markets for the
Region, these global conditions adversely affected economies in the Region. Although
economic conditions have improved in many countries in the Region where the Bank conducts
lending activities, this improvement may not be sustained, which could require the Bank to
make further loan loss provisions, which could produce additional losses and reduce the
Banks capital.

A
prolonged economic crisis in Argentina resulted in 2001 in a default on the countrys
public sector external debt. The Argentine crisis had a significant adverse effect on the
Banks financial condition and results of operations because it was required in 2002
to make large additions to its loan loss reserves to provide for expected losses on the
Banks Argentine credit portfolio. In addition, the deterioration in the Banks
financial condition resulting from the deterioration in the quality of the Banks
Argentine credit portfolio resulted in 2002 in a reduction in the Banks credit
rating by one credit rating agency to below investment grade and threatened the
Banks remaining investment grade credit ratings. In addition, it affected the
Banks funding activity resulting in a 64.9% decline in the Banks deposits
during 2002 and increased difficulty in obtaining funding for the Banks credit
portfolio. This was one of the factors, which contributed to a 48.6% decline in its credit
portfolio during 2002, which was accompanied by a 45.0% decline in the Banks net
interest income for 2002 compared to 2001.

In
2002, the Argentine government ended the parity between the Argentine peso and the U.S.
dollar. This was followed by a rapid devaluation of the Argentine peso, which declined in
value compared to the U.S. dollar by more than 70% during 2002. This devaluation
dramatically increased the difficulties for all borrowers in Argentina in repaying their
U.S. dollar denominated debt. In addition, the dramatically reduced levels of business
activity in Argentina and the lack of funding available to banks have drastically reduced
lending activities in Argentina thus eliminating the principal source of income for
Argentine banks and making it that much more difficult for the Banks borrowers to
repay their loans.



| | 65 | 
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---



Because
of concerns about the collectibility of the Banks Argentine loan portfolio, its
Board of Directors and management increased the Banks allowance for credit losses
during 2002 by $278.8 million. As a result of the increase in the Banks allowance
for credit losses during 2002 and charges for impairment losses on Argentine securities,
the Bank incurred a net loss for 2002 of $268.8 million. This also had the effect of
reducing the Banks stockholders equity to $328.9 million at December 31, 2002
from $598.4 million at December 31, 2001.

The
Banks Argentine credit portfolio at December 31, 2003 amounted to $435.1 million,
which represented a reduction of $679.3 million from December 31, 2001, $338.9 million of
which occurred during 2003. All of the Banks exposure in Argentina continues to be
denominated in U.S. dollars (with the exception of a small portion in Euros). None of the
Banks loans in Argentina have been converted to Argentine pesos. During 2003, the
Bank collected interest from Argentine borrowers of approximately $24.1 million. The ratio
of interest collected from Argentine borrowers to total interest payments due and payable
from these borrowers during 2003 was 85.5%.

As
of December 31, 2003, the Banks total reserves for credit losses were $258.3
million, of which $195.4 million related to the Banks loan and off-balance sheet
credit exposure in Argentina of $429.8 million. The Bank believes that the $195.4 million
of allowances for credit losses related to the Banks loan and off-balance sheet
credit exposure in Argentina is adequate to cover any eventual Argentine credit
charge-offs. The Board of Directors and management believe that the $195.4 million of
allowances for credit losses at December 31, 2003 related to the Banks exposure in
Argentina is adequate to cover any Argentine credit charge offs on the Banks
Argentine loans and contingencies. Argentina is in default on its public sector external
debt, and it is uncertain as to how and when this issue will be resolved. A worsening of
the situation could result in higher losses on the Banks remaining Argentine loans
that the Bank has provided for. This could reduce the Banks earnings, produce
additional losses, or reduce the Banks capital base.

The
Bank also believes that the remaining $62.9 million of allowance for credit losses is
adequate to cover any charge-offs that will be necessary on its non-Argentine credit
portfolio. The Bank will continue to maintain the allowance for credit losses for this
credit portfolio at levels, which reflect economic cycles. However, further pressures on
borrowers, could require additional allowances, which could also adversely affect the
Banks earnings and/or equity capital levels.

During
2002, the Bank reduced its credit portfolio in Brazil by approximately 52.4% from
$2,489.9 million at December 31, 2001 to $1,183.1 million at December 31, 2002, and by
approximately 2.4% to $1,153.9 million at December 31, 2003. This reduction occurred in
connection with the overall 48.6% reduction of the Banks credit portfolio, from
$6.4 billion at December 31, 2001 to $3.3 billion at December 31, 2002 to $2.8 billion at
December 31, 2003, a reflection of the Banks perception of increased levels of risk
in the Region. Although the Bank reduced its Brazilian credit portfolio by approximately
53.7% during 2002 and 2003, the Banks Brazilian credit portfolio still represented
40.5% of the Banks total credit portfolio. The credit portfolio reduction in Brazil
also was made in response to managements concern about the increased level of risk
regarding the Banks Brazilian credit portfolio exposure because of the uncertain
political and economic environment leading up to the election at the end of October 2002
of Luiz Inácio Lula da Silva. The election was preceded by the rapid decline in
the value of Brazils currency and speculation about the ability of Brazil to
service its approximately $239 billion of public debt, much of which must be refinanced
in the next several years. Given the adverse effect on the Bank during 2002 of the
deterioration of the Banks Argentine credit portfolio, including the need to create
additional credit loss allowances, the Banks management determined that it should
reduce its credit exposure in Brazil as quickly as possible in order to mitigate the
possible impact on the Bank of a deterioration of the political and economic situation in
Brazil. During 2002, the Bank increased its general allowance for credit losses allocated
to Brazil by $6 million or approximately 13% as a result of the increased risk perception
regarding Brazil, its political and financial situation and downgrades in its credit
ratings during 2002. During 2003, Brazil showed improvement, as evidenced by a stabilized
exchange rate, strong export performance, controlled rate of inflation and a substantial
reduction in the countrys sovereign interest rate spread. Brazil did not default on
its debt and the risk perception regarding Brazil improved substantially. The generally
improved



| | 66 | 
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---



situation resulted in the countrys
credit rating being upgraded by one of the international rating agencies during 2003.
These factors caused the Bank to make a $32 million reduction in the general allowance
for credit losses allocated to Brazil, although $16.3 million was added to the allowance
to cover one specific rescheduled loan to a Brazilian corporation. This loan was
successfully restructured in March 2004.

The
deterioration of the Banks financial condition during 2002 had a significant
negative impact on the Banks asset base and capital, and resulted in one rating
agency, Fitch, reducing the Banks credit rating to below investment grade and
threatened the Banks remaining investment-grade credit ratings. In order to address
the Banks weakened capital ratios and the risk that Moodys and Standard and
Poors would further reduce the Banks credit ratings to below investment grade,
the Bank initiated and completed in June 2003 a successful recapitalization as a result of
which the Bank raised $147.0 million of additional Tier 1 equity capital through the
sale of 22 million shares in a rights offering to the Banks existing shareholders.
As a result of this recapitalization, the Banks Tier 1 and Tier 2 equity
capital ratios at December 31, 2003 were 35.4% and 36.7%, respectively. On August 5,
2003, Fitch raised its rating on the Banks debt securities to BBB-, an investment
grade rating, reflecting the banks improved financial condition and its capital and
liquidity position as a result of the proactive management of the Banks Argentine
credit portfolio, the successful capital raising activities, and the Banks renewed
focus on trade finance. As of the date of this Annual Report, the Bank has long-term debt
ratings of Baa3 from Moodys Investor Services, Inc. (Moodys), BBB-
from Standard and Poors Ratings Services, a division of The McGraw-Hill Companies,
Inc. (Standard & Poors), and BBB- from Fitch and short-term debt
ratings of Prime 3, A-3 and F3 from Moodys, Standard & Poors and
Fitch, respectively. The Baa3 rating from Moodys, the BBB-rating from Standard
& Poors and the BBB- rating from Fitch are investment-grade ratings and the
ratings outlook from all three rating agencies is stable.

One
of the Banks sources of funding for short-term loans is interbank deposits received
principally from central banks in the Region. Historically, these deposits have
represented approximately 35% of total liabilities. During 2002, these central banks
withdrew a substantial portion of their deposits. The Bank believes that the central banks
withdrew these deposits as a result of the Banks lower credit ratings, perceived
problems in the Argentine portfolio and the need for liquidity on the part of some of
these central banks. Overall deposits declined by 64.9% from $1,571.4 million at December
31, 2001 to $552.0 million at December 31, 2002 and, in part as a result, total loans
declined by 46.8% from $4,733.7 million at December 31, 2001 to $2,516.5 million at
December 31, 2002. During 2003, the deposit client base started to increase following the
successful recapitalization program, the credit rating upgrade by Fitch and the improved
environment. Overall deposits increased by 27.4% from $552.0 million at December 31, 2002
to $703.0 million at December 31, 2003, an increase of $151.0 million. The Bank was able
to maintain a healthy net cash position throughout 2002 and 2003 due to, among other
things, the repayment of loans funded with these deposits, reflecting an asset and
liability maturity profile that is basically matched. At December 31, 2003, deposits
represented 35.5% of total liabilities, with the balance comprised of short-term
obligations primarily from international banks and medium-term obligations primarily from
the debt capital and syndication markets. A reduction in the Banks credit ratings
below investment grade, or deterioration in economic conditions in the Region creating the
need for liquidity on the part of central banks, would likely result in further
withdrawals of deposits by central banks and other depositors and reduced access to the
debt capital markets.

The
Banks management follows a conservative liquidity management strategy and in view of
the volatility in the Region began gradually increasing its net cash position in the
second quarter of 2001. During 2002 and 2003, the Bank was able to reduce its financial
liabilities by approximately $2.7 billion and $609.1 million, respectively, in an orderly
fashion while maintaining an adequate liquidity position. At December 31, 2003, liquidity
levels amounted to $252.6 million, representing a net cash position of 35.9% of total
deposits. A lower interest rate environment during 2002 and 2003 generated a lower return
on the Banks available capital funds invested in liquid assets. Because returns on
funds invested in liquid assets impact net income, a continued trend of lower interest
rates in the markets in which the Bank invests its funds would adversely affect the
Banks net income in the future.



| | 67 | 
| | -- | 



---



Institutionally,
the Banks business remains focused on services, products, clients and transactions
linked to foreign trade. The Bank believes that its competitive advantages in the trade
finance business are both structural and operational. The structural advantage is based on
the Banks unique mission, multilateral character, shareholder composition, and
proven commitment to its clients and to Latin America. The Banks operational
advantages are based on its technical expertise, regional know-how, management excellence,
transparency, and first-rate corporate governance. Part of the Banks tactical
approach to leveraging its competitive advantages and becoming a complete trade services
solution for its clients entails the deployment of new products that the Bank believes
will increase, diversify, and stabilize its revenue stream. Basic to this approach is to
limit the cost and execution risk of trade finance transactions through the use of
strategic alliances with proven providers.

In
July 2003, the Bank and Bank of America Corporation completed a strategic alliance that
offers Bank of Americas U.S. Dollar clearing services to the Banks clients in
the Latin America and Caribbean region. This alliance offers an opportunity to combine the
Banks reliable trade finance capabilities with Bank of Americas widely
recognized product excellence in clearing services.

In
January, 2004, the Bank and Trade Source International (TSI) completed a
strategic alliance that offers the Banks clients TSIs suite of global trade
finance services, based on TSIs international expertise in export credit agency and
other trade-specific financial structures. The services include creating and implementing
innovative financing and payment solutions for trade-related structured transactions. As
part of the Banks strategy of increasing the scope of trade finance products through
strategic alliances, TSI affords the Bank the capability of deploying first-rate export
credit agency structures. The Banks goal is to become the most comprehensive trade
finance financial institution in Latin America, while minimizing the execution and
investment risk.

2004
will bring new challenges and opportunities for the Bank. The Bank is projecting continued
growth in its foreign trade financing business. The Bank will also develop new business
models in countries in the Region, which have investment grade ratings, such as Mexico and
Chile. In addition, the Bank will continue to focus on increasing the number of new
products offered through strategic alliances, thus improving its revenue diversification.

During
2004, several free trade treaty initiatives involving Latin America are expected to be
concluded, which would stimulate foreign trade. This would provide important business
opportunities for the Bank.

With
  regard to the Argentine portfolio, the Bank will continue its efforts to collect
  restructured credits as they mature, which represent 88% of the total Argentine
  portfolio, and restructure the remaining Argentine credit portfolio.

5.E
  Off-Balance Sheet Arrangements

In
the normal course of business, the Bank enters into arrangements that are not recognized
on the balance sheet and do not affect the income statement. These types of arrangements
are kept off balance sheet as long as the Bank does not incur an obligation from them or
become entitled to an asset itself. As soon as an obligation is incurred, it is recognized
on the balance sheet, in the reserve for losses on off-balance sheet credit risk, with the
resulting loss recorded in the income statement. It should be noted, however, that the
amount recognized on the balance sheet does not represent the full potential loss inherent
in such arrangements.

These
arrangements meet the financial needs of customers. They are important for the Bank, with
respect to liquidity, capital resources or market and credit support. The Bank does not
rely on such arrangements as a major source of revenue. The Banks credit policy
establishes the recognition of a reserve for estimated losses on off-balance sheet credit
risk with the resulting charge to the income statement. As of December 31, 2003 and 2002,
the amounts recorded in this reserve were $10.6 million and $6.2 million, respectively.



| | 68 | 
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---



At
December 31, 2003 the off-balance sheet arrangements of the Bank include stand by letters
of credit, guarantees (commercial risk and country risk), credit commitments, (including
other commitments and unused commitments). See description of these products in Note 18 to
Consolidated Financial Statements.

For
2003, commission income from off-balance sheet arrangements amounted to $7.7 million.

During
November 2003, the Bank made a commitment to invest $5.0 million in an investment fund,
whose main objective is to invest in the Mexican export industry and its supply chain.

No
obligations have arisen from variable interest entities as defined in FIN 46, since all
the Banks subsidiaries were consolidated.

5.F
  Contractual Obligations and Commercial Commitments

The
following tables set forth information regarding the Banks contractual obligations
and commercial commitments as of December 31, 2003:

|                                    | Payments Due by Period
|----------------------------------- | ----------------------
|
|                                    |                       
|Long-term debt obligations          |                       
|Short-term debt obligations         |                       
|Leasehold obligations               |                       
|Other Short-term obligations        |                       
|                                    |                       
|Total contractual
      obligations |                       
|                                    |                       

|                                   | Amount of Commitment Expiration Per Period
|---------------------------------- | ------------------------------------------
|
|                                   |                                           
|Lines of credit                    |                                           
|Standby letters of credit          |                                           
|Guarantees                         |                                           
|Other commercial commitments       |                                           
|                                   |                                           
|Total Commercial
      Commitments |                                           
|                                   |                                           

---

*This amount is without maturity.

At
December 31, 2003, the Bank had no material commitments for capital expenditures.

Item
  6. Directors, Senior Management and Employees

6.A
  Directors and Senior Management

Directors

The
following table sets forth certain information concerning the Directors of the Bank as of
the date of this Annual Report.



| | 69 | 
| | -- | 



---



|Name                                          | Country of
      Citizenship | Position
      Held With
      The Bank | First Year
      as Director             | Year
      Term Expires
|--------------------------------------------- | ---------------------------- | --------------------------------------- | ---------------------------------------- | -----------------------
|CLASS A                                       |                              |                                         |                                          |                        
|Maria da Graça França
      (1)               |                              | Brazil                                  | Director                                 | 2004                   
|General Manager and
      Managing Director   |                             
|for North America,                            |                             
|Banco do Brasil, New
      York               |                             
|                                              |                              |                                         |                                          |                        
|Guillermo Güémez García                       |                              | Mexico                                  | Director                                 | 1997                   
|Deputy Governor,                              |                             
|Banco de Mexico, Mexico                       |                             
|                                              |                              |                                         |                                          |                        
|Santiago Perdomo Maldonado                    |                              | Colombia                                | Director                                 | 2003                   
|President,                                    |                             
|Banco Colpatria-Red
      Multibanca          |                             
|Colpatria                                     |                             
|                                              |                             
|CLASS E                                       |                             
|Will C. Wood                                  |                              | U.S.A.                                  | Director                                 | 1999                   
|Principal                                     |                             
|Kentwood Associates,
      California         |                             
|                                              |                              |                                         |                                          |                        
|Mario Covo                                    |                              | Mexico                                  | Director                                 | 1999                   
|Chief Executive Officer,                      |                             
|Finaccess International,
      Inc., New York |                             
|                                              |                              |                                         |                                          |                        
|Herminio Blanco (2)                           |                              | Mexico                                  | Director                                 | 2004                   
|Chief Executive Officer,                      |                             
|Soluciones Estratégicas
      Consultoría     |                             
|                                              |                              |                                         |                                          |                        
|William Hayes (2)                             |                              | U.S.A.                                  | Director                                 | 2004                   
|President,                                    |                             
|Wellstone Global Finance,
      Connecticut   |                             
|                                              |                              |                                         |                                          |                        
|Alexandre Lodygensky Jr. (2)                  |                              | Brazil                                  | Director                                 | 2004                   
|Chief Executive Officer,                      |                             
|Rutherford Trading Co.                        |                             
|                                              |                             
|ALL CLASSES OF COMMON STOCK                   |                             
|Gonzalo Menéndez Duque (3)                    |                              | Chile                                   | Chairman of the Board
      of Directors | 1990                   
|Director                                      |                             
|Banco de Chile, Chile                         |                             
|                                              |                              |                                         |                                          |                        
|Jaime Rivera (4)                              |                              | Guatemala                               | Director                                 | 2004                   
|Chief Executive Officer,                      |                             
|BLADEX, Panama                                |                             



|(1) |  | Ms. França replaced
      Mr. Rubens Amaral who resigned as a member of the Board of Directors on
      February 4, 2004 and joined the Bank as Chief Commercial Officer and General
      Manager of the Banks New York Agency effective March 1, 2004.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 70 | 
| | -- | 



---





|(2) |  | Two of the three class
      E directors were elected to class E directorships to represent positions
      held by representatives of the Banks class B shares which were forfeited
      to the class E shareholders as a result of the class B shares falling below
      10% of the Banks total outstanding shares of common stock.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Class B Director from 1990
      to 2000; elected as a Director to represent all classes of common stock
      in April 2003. In April 2004, was re-elected Chairman of the Board of Directors.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Mr. Jaime Rivera was elected
      as a director on April 14, 2004 to complete the term of Mr. José Castañeda
      who retired from BLADEX on December 31, 2003 and resigned from the Board
      of Directors on January 1, 2004.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Maria
da Graça França has served as Head of North America and General Manager
of Banco do Brasil, New York Branch since 2004. Ms. França has been employed by
Banco do Brasil in various capacities since 1971, holding the positions of Executive
General Manager of the International Division in Brasilia, Brazil from 2002 to 2003,
Regional Manager for the operations of the Bank in South America, based in Argentina in
2002, General Manager of Banco do Brasil Paris Branch from 1999 to 2002, Deputy General
Manager of Banco do Brasil Miami Branch from 1993 to 1999, General Manager of the
Department responsible for Banco do Brasil foreign network from 1992 to 1993, Deputy
General Manager in charge of the foreign exchange from 1989 to 1992, Assistant Manager
within the Risk Management Area from 1988 to 1989, Assistant Manager at the foreign
exchange internal controls from 1984 to 1987 and Foreign Exchange Department from 1971 to
1984.

Guillermo
Güémez García has served as Deputy Governor of Banco de Mexico
since 1995 and served as Vice Chairman and President of the Executive Committee in Grupo
Azucarero Mexico of Grupo de Embotelladoras Unidas, S. A. de C. V. from 1993 to 1994. He
served on the Mexican Business Coordinating Council for Nafta in the capacity of Executive
Director from 1991 to 1993. He was employed by Banco Nacional de Mexico in various
capacities from 1974 to 1990, including holding the position of Executive Vice President
for International Products from 1986 to 1990. Mr. Güémez García
was the founder and served as President of Euromex Casa de Cambio and Euroamerican Capital
Corporation from 1986 to 1990. He has held the positions of Executive Vice President of
International Treasury and Foreign Exchange, Exchange Controls and Ficorca from 1982 to
1986, as well as International Operations from 1984 for Banco Nacional de Mexico. He was a
representative in London and set up the Banco Nacional de Mexicos branch in London
from 1979 to 1981 and was the Manager for Foreign Currency Funding and International
Credits from 1974 to 1978. Mr. Güémez García was employed by
the Bank of America in Mexico, as an Assistant Representative in 1973 and from 1964 to
1972 he worked in the construction and cement industry.

Santiago
Perdomo Maldonado has served as President of Banco Colpatria  Red Multibanca
Colpatria since May 1999. Mr. Perdomo Maldonado has been employed by Banco Colpatria in
various capacities since 1994, including: as Executive Vice President from November 1998
to April 1999, as President from September 1994 to October 1998, and as Executive Vice
President of Corporación Colpatria from February 1994 to August 1994. Previously,
he was Manager of Corredora Bursatil from March 1993 to January 1994. Mr. Perdomo
Maldonado has also served as Manager of Colpatria Sociedad Administradora from September
1991 to February 1993, and as Manager of Corporate Banking from July 1981 to August 1991.

Will
Wood has served as the founding principal of Kentwood Associates of Menlo Park, California
since 1993. Mr. Wood was employed by Wells Fargo in the International Banking Group and
served as an Executive Vice President from 1986 to 1989. While at Wells Fargo, he was a
Director of the Bankers Association for Foreign Trade and PEFCO, a privately owned
export finance company. Mr. Wood was employed by Crocker Bank and served as Executive Vice
President in charge of the International Division and Manager of the Latin America Area
from 1975 to 1986. He worked for Citibank in La Paz, Bolivia, Lima, Peru, Rio de Janeiro
and Sao Paulo, Brazil and began his career with Citibanks Overseas Division in 1964
in New York.

Mario
Covo was the founding partner and has served as the Chairman and Chief Executive Officer
of Finaccess International Inc. since 1999. He was the founder of Columbus Advisors and
Columbus Group and served in such capacity from 1995 to 1999. Mr. Covo was employed by
Merrill Lynch, as Managing Director heading the Latin America Capital Markets Group from
1989 to 1995. Previously, he was employed by Bankers



| | 71 | 
| | -- | 



---



Trust Company, as a Vice President
in the Latin American Merchant Banking Group, focusing on corporate finance and
debt-for-equity swaps from 1985 to 1989. He was employed as an International Economist
for Chase Econometrics, focusing primarily on Venezuela and Colombia, from 1984 to 1985.

Herminio
A. Blanco has served as Chief Executive Officer of Soluciones Estratégicas
Consultoría since 2002, business consultant to some of the leading corporations
in the world, advisor to the Inter-American Development Bank, advisor to national
governments on trade negotiations, member of the International Advisory Committee of
Mitsubishi Corporation and member of the Trilateral Commission since 2000. Mr. Blanco was
Secretary of Trade and Industry, Chairman of the National Council for Deregulation,
Chairman of the Advisory Council for Trade Negotiations, Chairman of the Board of
Exportadora de Sal, S.A., Chairman of the Board of Fideicomiso de Fomento Minero and Vice
Chairman of the Board of Banco Nacional de Comercio Exterior, in Mexico from 1994 to 2000.
He was Undersecretary for International Trade and Negotiations of the Ministry of Trade
and Industry of Mexico from 1993 to 1994 and from 1988 to 1990. From 1990 to 1993, Mr.
Blanco was Mexicos Chief Negotiator of the North American Free Trade Agreement
(NAFTA). He was one of the three members of Council of Economic Advisors to the President
of Mexico from 1985 to 1988. Mr. Blanco was Assistant Professor of Economics at Rice
University, Houston, Texas from 1980 to 1985. He was senior advisor to the Finance
Minister of Mexico from 1978 to 1980.

William
Dick Hayes has served as President of Whaleco, Inc., New York, President of Wellstone
Global Finance, LLC, San Francisco, California and Connecticut and a Charter Member of the
Board of Directors and Investment Committee of WestLB-Tricom Forfaiting Fund Limited,
Bermudas since 1999. He worked for West Merchant Bank Limited, London (formerly Standard
Chartered Merchant Bank and Chartered WestLB), in various capacities from 1987 to 1999.
Mr. Hayes worked for Libra Bank Limited, New York Agency as Senior Vice President-Trading
from 1986 to 1987. He was Principal of W.D. Hayes and Associated, California from 1984 to
1986. He worked for Wells Fargo Bank, N.A., San Francisco, California from 1969 to 1984 in
various capacities.

Alexandre
Lodygensky Jr. has held the position of Chief Executive Officer of Rutherford Trading Co.
since August 2002. From 1998 to 2002, he worked as a Regional Commercial Director for HSBC
in Brazil, leading the commercial area for two of the largest regional operations: Central
region, based in the city of Belo Horizonte, and later the Southeast region, based in the
city of São Paulo. Before joining HSBC, Mr. Lodygensky worked as a Commercial
Director for Banco Excel-Econômico starting in 1993. From 1986 to 1993, he worked
as a General Manager and later as head of International Trade Finance for Banco
Francês e Brasileiro S.A, a subsidiary of Crédit Lyonnais. From 1984 to
1986, he worked for Banorte in the position of General Finance Manager, responsible for
the Treasury and the Financial Planning and Control Department. Before joining Banorte,
from 1981 to 1984, Mr. Lodygensky worked as a Trainee and then as a Finance Manager for
Banco ValBrás and one of its successors, Digibanco Comercial S.A, a joint venture
of CCF-Crédit Commercial de France and Sharp Brasil.

Gonzalo
Menéndez Duque has served as Director of Banco de Chile since 2001. He has also
served as a Director of several companies related to Grupo Luksic, including: Banedwards
Compañía de Seguros de Vida, Banchile Corredores de Bolsa, Cia. Nacional
de Teléfonos, Telefónica del Sur and Telefónica de Coyhaique
since 2000, Grupo Minero Antofagasta Minerals since 1997, Holdings Quiñenco,
Minera Michilla, Fundaciones A. Luksic and P. Baburizza since 1996, and Antofagasta Plc,
England since 1985. Mr. Duque was a Director of Banco Edwards from 1999 to 2001, Banco
Santiago from 1993 to 1999 and Grupo Financiero OHCH from 1996 to 1999. He was also the
Chief Executive Officer of the following companies: Empresas Lucchetti, S.A. from 1994 to
1998, Banco OHiggins from 1985 to 1992 and Antofagasta Group from 1980 to 1985.

Jaime
Rivera became the Chief Executive Officer of the Bank on January 1, 2004 after the
retirement of Mr. Jose Castañeda on December 31, 2003. He was Chief Operating
Officer of the Bank since March 2002. Previously, Mr. Rivera was employed by the
Bank of America in various capacities since 1978, including: Managing Director of the
Latin America Financial Institutions Group in Miami and at the Latin America Corporate
Finance team in New



| | 72 | 
| | -- | 



---



York, as General Manager in Brazil,
Argentina and Uruguay, as Credit and Marketing Manager in Chile and as Manager of Latin
America Information Systems in Venezuela. Mr. Rivera has also held Board positions with
the Council of the Americas, the Florida International Bankers Association and the
Latin American Agribusiness Development Corporation.

Senior Management

The
following table and information sets forth the names of the executive officers of the Bank
and their respective positions as of the date hereof and positions held by them with the
Bank and other entities in prior years:

|Name                      | Position | Country of
      Citizenship                                                    
|------------------------- | -------- | --------------------------------------------------------------------------------
|                          |          |                                                                                 
|Jaime Rivera              |          | Chief Executive Officer                                                         
|                          |          |                                                                                 
|Miguel Moreno             |          | Senior Vice President, Controller                                               
|                         
|Rubens V. Amaral Jr       |          | Chief Commercial Officer and General Manager
      of the Banks New York Agency
|                         
|Christopher E. D. Hesketh |          | Senior Vice President, Treasury                                                 
|                         
|Carlos Yap S              |          | Senior Vice President, Finance                                                  
|                         
|Miguel A. Kerbes          |          | Senior Vice President, Risk Management                                          
|                         
|Joaquín Uribe             |          | Senior Vice President, Processes, Technology
      and Operations               
|                         

Jaime
Rivera became the Chief Executive Officer of the Bank on January 1, 2004 after the
retirement of Mr. Jose Castañeda on December 31, 2003. He was Chief Operating
Officer of the Bank since March 2002. Previously, Mr. Rivera was employed by the Bank
of America in various capacities since 1978, including: Managing Director of the Latin
America Financial Institutions Group in Miami and at the Latin America Corporate Finance
team in New York, as General Manager in Brazil, Argentina and Uruguay, as Credit and
Marketing Manager in Chile and as Manager of Latin America Information Systems in
Venezuela. Mr. Rivera has also held Board positions with the Council of the Americas, the
Florida International Bankers Association and the Latin American Agribusiness
Development Corporation.

Miguel
Moreno has served as Senior Vice President, Controller of the Bank since September 2001.
He was a partner and Information Technology Consulting Manager for PriceWaterhouse,
Bogota, Colombia from 1988 to 2001 and served as Vice President of Information Technology
and Operations for Banco de Crédito, Bogota, Colombia from 1987 to 1988. Mr.
Moreno served as Chief Executive Officer, TM Ingeniería, Bogota, Colombia, from
1983 to 1987 and as Chief Executive Officer, ICDS Ltd., Bogota, Colombia, from 1982 to
1987. He was the Head of the Industrial Engineering Department, Los Andes University,
Colombia, from 1982 to 1984. Mr. Moreno was employed by SENA, Organization and Systems
Office and Planning Consulting, Colombia from 1977 to 1981 and worked for the Finance and
Public Credit Ministry of Colombia, as Advisor to the Minister from 1976 to 1977.



| | 73 | 
| | -- | 



---

Rubens
V. Amaral Jr. became Chief Commercial Officer and General Manager of the Banks New
York Agency in March 2004. He worked for Banco do Brasil, New York Branch as General
Manager and Managing Director for North America since 2000. Mr. Amaral has been employed
by Banco do Brasil in various capacities since 1975, holding the positions of Managing
Director, International Division and alternate member of the board of directors in 1998,
Executive General Manager of the International Division in Sao Paulo from 1994 to 1998,
Deputy General Manager in the New York branch in charge of the Trade Finance &
Correspondent Banking Department, Head of Staff of the International Division from 1993 to
1994 and Advisor, Head of Department and General Manager in the Trade Finance Area at the
International Division  Head Office, from 1989 to 1993. Mr. Amaral also served
as a representative for the Central Bank of Brazil from 1982 to 1988 in banking
supervision.

Christopher
E. D. Hesketh has served as Senior Vice President, Treasury of the Bank since September
1989. He was employed by Yamaichi International America, Inc. as Vice President, Corporate
Finance Department, in New York from 1986 to 1989. Mr. Hesketh was previously employed by
Manufacturers Hanover Overseas Corporation, New York, in various capacities since 1980,
including: Regional Credit Manager, New York from 1985 to 1986, Credit Director, Madrid,
Spain from 1982 to 1985, and Assistant Credit Manager of Manufacturers Hanover Leasing
Corporation, New York from 1980 to 1982. Mr. Hesketh was employed by Barclays Bank
International in various capacities from 1974 to 1980 in Spain and London.

Carlos
Yap S. has served as Senior Vice President, Finance, of the Bank since July 2002. Mr. Yap
previously served as Vice President, Finance, of the Bank from 1993 to 2002. Prior to this
position, Mr. Yap worked for the Bank in the departments of Institutional Planning,
Treasury, Correspondent International Banking and Capital Markets from 1980 to 1993. Prior
to his employment by the Bank, Mr. Yap worked for Banco Nacional de Panama in its Credit
Department from 1979 to 1980, Azucarera Nacional, S.A. and the Panama Canal Company from
1977 to 1979.

Miguel
Kerbes has served as Senior Vice President, Risk Management, of the Bank since July 2002.
Mr. Kerbes previously served as Vice President, Risk Management, of the Bank from
2000 to 2002. He was the Assistant Credit Director for the Southern Cone Area of Banco
Santander  Chile from 1995 to 2000. Mr. Kerbes also served as the Head of Credit
Division at Banco Boston Chile from 1992 to 1995 and was employed by ING Bank in various
capacities from 1982 to 1992.

Joaquín
Uribe has served as Senior Vice President, Processes, Technology and Operations of the
Bank since July 2002. Mr. Uribe previously served as Vice President, Processes, Technology
and Operations of the Bank since September 2001. He was previously employed by Citibank
Colombia in various capacities from 1997 to 2001, including: Senior Country Operations
Officer  Corporate and Consumer Banking from 2000 to 2001, Country Operations
Officer  Consumer Banking from 1998 to 2000, and V.P.  Head of Technology
 Consumer Banking from 1997 to 1998. Mr. Uribe was employed by UNISYS Corporation,
Colombia from 1987 to 1997 and held the position of Information Services Manager for
System Integration and Project Quality Office. Mr. Uribe also served as the Director
of the Data Processing Center and Professor of the Colombian School of Engineering from
1981 to 1987.

6.B
  Compensation

Cash Compensation

The
aggregate amount of cash compensation paid by the Bank during the year ended December 31,
2003 to the executive officers of the Bank as a group for services in all capacities was
$1,901,711.41. During the fiscal year ended December 31, 2003, the Bank accrued, and in
March 2004, paid a performance-based bonuses to the Banks executive officers in the
aggregate amount of $752,000. At December 31, 2003, the total amount set aside or accrued
by the Bank to provide pension, retirement or similar benefits for executive officers was
approximately $1,633,000.

The
Board of Directors revised the compensation of its members on July 19, 2003. As part of
the revised compensation plan each non-employee director of the Bank is eligible to
receive an annual amount of up to $30,000 for his services as a director and an
additional amount of $1,500 for each meeting of the Board of Directors and each meeting
of shareholders attended, and $1,000 for each Board Committee meeting attended.



| | 74 | 
| | -- | 



---

The Chairman of the Board of
Directors is eligible to receive an additional 50% of the compensation that other
directors are eligible to receive. The Chairman of each Committee of the Board of
Directors is eligible to receive an additional amount of $500 for each Board Committee
meeting attended. The aggregate amount of cash compensation paid by the Bank during the
year ended December 31, 2003 to the directors of the Bank as a group for their services
as directors was $530,250.

Share Compensation
  and Ownership

On
October 13, 1995, the Board of Directors adopted a stock option plan (the 1995 Stock
Option Plan) authorizing the Bank to grant to eligible executive officers and
employees stock options on up to 300,000 class E shares. The 1995 Stock Option Plan
provides that options may be granted at an exercise price equal to the fair market value
of the class E shares on the date of the grant of the option. On October 1, 1999, the
Board of Directors adopted another stock option plan (the 1999 Stock Option
Plan) authorizing the Bank to grant to eligible executive officers and employees
stock options on up to 350,000 class E shares. The 1999 Stock Option Plan provides that
options may be granted at an exercise price equal to the fair market value of the class E
shares on the date of the grant of the option. Participants in the 1999 Stock Option Plan
who remain employed will become fully vested in their options four years from the date of
grant. Options granted under both the 1995 Stock Option Plan and the 1999 Stock Option
Plan remain outstanding for a period of 10 years unless sooner forfeited.

The
following table sets forth information regarding the stock options granted under the 1995
Stock Option Plan and the 1999 Stock Option Plan since the inception of these plans. Each
exercise price listed below is equal to the fair market value of the class E shares on the
dates on which the options related thereto were granted under the plans.

|                
|----------------
|
|                
|October 13, 1995
|                
|January 31, 1997
|                
|February 6, 1998
|                
|February 4, 1999
|                
|February 4, 2000
|                
|February 6, 2001
|                

As
of December 31, 2003, 62,766 class E shares have been purchased through the exercise of
stock options granted under the 1995 Stock Option Plan and the 1999 Stock Option Plan.

In
addition, in 1999, the Board of Directors approved the adoption of two employee stock
programs. These programs were implemented in the year 2001 and have the following terms:

|(1) | Deferred Equity
      Unit Plan (the DEU Plan): Employees who participate in the Banks
      stock purchase plan and make elections thereunder to receive up to 25% of
      their annual bonuses in class E shares of the Bank (the Bonus Shares)
      automatically participate in the DEU Plan. Under the DEU Plan, the Bank
      grants to the employee one deferred equity unit for every two Bonus Shares
      purchased under the stock purchase plan. Each deferred equity unit represents
      the right to receive one class E share of the Bank (or the economic equivalent
      thereof.) A participating employee will vest in the deferred equity units
      credited to him or her if the participant (i) remains employed by the Bank
      through the applicable vesting period and (ii) allows the Bonus Shares to
      be held in the Banks custody (or under alternative arrangements) through
      the vesting period. The vesting period is generally three years from the
      date of purchase as to 50% of the deferred equity units and five years from
      the date of purchase as to the remaining 50% of the deferred equity units.
      In certain circumstances, participants will have the opportunity to continue
      to vest in deferred equity units after termination of employment. Payments
      in respect of deferred equity units are made after vesting. Participating
      employees will receive dividend equivalents with respect to their vested
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 75 | 
| | -- | 



---



| | deferred equity
      units and will receive additional deferred payments (which will vary depending
      on the performance of the class E shares) if and after the underlying deferred
      equity units vest.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Deferred Compensation
      Plan (the DC Plan): The DC Plan has two separate features. Under
      the first component of the DC Plan, the Bank may grant to each eligible
      employee a number of deferred equity units equal to the product of (x) an
      amount equal to a percentage, not to exceed 3%, of the employees compensation,
      divided by (y) the fair market value of a class E share of stock of the
      Bank. Each deferred equity unit represents the right to receive a class
      E share (or the economic equivalent thereof). Employees will vest in the
      deferred equity units after three years of service (which includes past
      service with the Bank). Subject to certain acceleration events, distributions
      will be made in respect of deferred equity units on the later of (i) the
      date the vested deferred equity units are credited to an employees
      account and (ii) 10 years after the employee is first credited with deferred
      equity units under the DC Plan. Participating employees will receive dividend
      equivalents with respect to their vested deferred equity units and will
      receive additional deferred payments (which will vary depending on the performance
      of class E shares) if and after the underlying deferred equity units vest.
      The second component of the DC Plan allows employees who are not citizens
      or residents of the United States to defer a percentage of their compensation,
      and receive a discretionary, matching cash contribution. In no event shall
      the value of (i) the discretionary, matching cash contribution made on behalf
      of an employee and (ii) the grant of deferred equity units made to such
      employee exceed 6% of the employees annual compensation.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As
of December 31, 2003, an aggregate number of 122 and 28,890 deferred equity units,
representing the right to acquire the same number of class E shares or the economic
equivalent thereof, had been granted to eligible employees of the Bank and were
outstanding under the DEU Plan and the DC Plan, respectively. As of the date hereof, 83
deferred equity units granted under the DC Plan have vested.

On
April 13, 2004, the Board of Directors approved an indexed stock option plan (the
Indexed Stock Option Plan) for executive officers and directors which provides
indexed options for class E shares with the exercise price indexed to a customized Latin
American general market index. The exercise price will be adjusted based on the change in
this customized index. The option term will be seven years, and there will be cliff
vesting after four years. The number of shares for which options are granted will be
calculated using the Black-Scholes derived value of the options or other method approved
by the Board. The Indexed Stock Option Plan became effective April 13, 2004. As of the
date hereof, indexed options with respect to 19,476 and 167,410 class E shares have been
granted to directors and executive officers, respectively, by the Board of Directors under
the Indexed Stock Option Plan. The Board of Directors has decided to discontinue the DEU
Plan, the DC Plan, the 1995 Stock Option Plan and the 1999 Stock Option Plan and no
additional grants will be made under these plans.

In
2000, the Board of Directors adopted a stock option plan (the Board Plan) for
the non-employee directors of the Bank. Pursuant to the Board Plan, each year the Board
of Directors may grant options to each non-employee director to purchase class E shares
of the Bank. The aggregate number of class E shares that may be issued upon exercise of
options under the Board Plan is 50,000. If options are granted under the Board Plan in
any calendar year, the Chairman of the Board of Directors will receive options to
purchase shares that have an aggregate value of $15,000 on the date of grant and each
other director will receive options to purchase shares that have an aggregate value of
$10,000 on the date of grant. The exercise price for all options under the Board Plan
will be equal to the fair market value of a class E share on the date of grant. Directors
will fully vest in their options on the one-year anniversary of the date of grant and
such options may be exercised at any time thereafter, up to the fifth anniversary of the
date of grant. All directors must pay the exercise price in cash, except that the Board
of Directors may determine, in its discretion, to allow payment of the exercise price in
class E shares. Except in the case of death or disability, all unvested options of a
grantee will be forfeited upon the termination of such grantees services as a
director of the Bank. As of December 31, 2003, stock options with respect to 2,584 class
E shares had been granted by the Board of Directors under the Board Plan at an exercise
price of $32.88 per class E share. The Board of Directors granted all of these stock
options on February 6, 2001. As of the date hereof, none of the stock options granted by
the Board of Directors under the Board Plan have been exercised. In



| | 76 | 
| | -- | 



---



accordance with the Board Plan,
options on 304 class E shares were forfeited during 2001 as a result of the expiration of
the term of a director.

In
2003, the Board of Directors adopted a restricted stock plan (the Board Restricted
Stock Plan) for the non-employee directors of the Bank. Under the Board Restricted
Stock Plan, each non-employee director of the Bank is awarded annually a number of shares
of class E common stock equal to the number that results from dividing $10,000 ($15,000 in
the case of the Chairman of the Board) by the market price of a class E share on the date
the award is made. Directors receiving shares of restricted stock under the plan will have
all the rights of stockholders of the Bank (including voting and dividend rights), except
that all such shares will be subject to restrictions on transferability. The restrictions
placed on the shares awarded under the Board Restricted Stock Plan will lapse on the fifth
anniversary of the award date. If a directors service with the Bank is terminated
for cause, the shares that then remain subject to restrictions will be forfeited. However,
the restrictions will immediately lapse on all shares granted to a director in the event
of the termination of the directors service with the Bank due to death, disability,
or for any other reason other than termination for cause. Dividends on the restricted
shares are held by the Bank until the restrictions lapse, and if the restricted shares are
forfeited, then any dividends relating to those shares are forfeited. During 2003, 9,547
class E shares were issued to non-employee directors under the Board Restricted Stock Plan
and compensation expense charged against income in 2003 was $94,993.

The
Board of Directors has decided to discontinue the Board Plan and no additional options
will be granted under this plan. The Board Plan has been replaced by the Board Restricted
Stock Plan and the Indexed Stock Option Plan. Under the revised Board compensation plan
adopted on July 19, 2003, each non-employee director of the Bank will be awarded annually
options to purchase class E shares having a Black-Scholes derived value of $10,000
($15,000 in the case of the Chairman of the Board of Directors) once the Indexed Stock
Option Plan enters into effect. The Indexed Stock Option Plan became effective April 13,
2004.

The
Bank sponsors a defined contribution plan for its expatriate officers. The Banks
contributions are determined as a percentage of the eligible officers annual salary,
with each officer contributing an additional amount withheld from his salary and deposited
in a savings account with the Bank, earning interest at market rates. During the years
2003, 2002 and 2001, the Bank charged to salaries expense $139,934, $118,900, and $50,764,
respectively, with respect to this plan. As of December 31, 2003 and 2002, the accumulated
liability payable under this contribution plan amounted to $571,755 and $431,821,
respectively.

As
of December 31, 2003, the Banks executive officers, directors, and Advisory Council
members, as a group, owned an aggregate of 89,227 class E shares, which was 0.3% of all
issued and outstanding class E shares.

The
following tables set forth information regarding the number of shares owned by the
Banks executive officers and options and rights held under each of the DEU Plan, the
DC Plan, the 1995 Stock Option Plan and the 1999 Stock Option Plan, as of December 31,
2003.

|Name and Position
      of Executive Officer | Number of
      Shares
      Beneficially
      Owned as of
      December 31,
      2003 | Number of Shares
      that may be
      Acquired within 60
      Days of Dec 31,
      2003 | Options under
      1995 Stock
      Option Plan | Options under
      1999 Stock
      Option Plan | Rights under
      DEU Plan | Rights under
      DC Plan
|-------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | --------------------------- | --------------------------
|                                            
|José Castañeda(1)                            |                                                                                           |                                                                                              |                                                  |                                                  |                             |                           
|Chief Executive Officer                      |                                                                                           | 42,726                                                                                       |                                                  | 64,666                                           |                             | 55,648                    
|                                             |                                                                                          
|Jaime Rivera                                 |                                                                                          
|Chief Executive Officer                      |                                                                                           | 0                                                                                            |                                                  | 0                                                |                             | 0                         



| | 77 | 
| | -- | 



---





|Name and Position
      of Executive Officer | Number of
      Shares
      Beneficially
      Owned as of
      December 31,
      2003 | Number of Shares
      that may be
      Acquired within 60
      Days of Dec 31,
      2003 | Options under
      1995 Stock
      Option Plan | Options under
      1999 Stock
      Option Plan | Rights under
      DEU Plan | Rights under
      DC Plan
|-------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | --------------------------- | --------------------------
|                                            
|Miguel Moreno                                |                                                                                          
|Senior Vice President -                      |                                                                                          
|Controller                                   |                                                                                           | 0                                                                                            |                                                  | 0                                                |                             | 0                         
|                                             |                                                                                          
|Rubens V. Amaral Jr.(2)                      |                                                                                          
|Chief Commercial Officer and General         |                                                                                          
|Manager of the Banks New York
      Agency  |                                                                                           | 0                                                                                            |                                                  | 0                                                |                             | 0                         
|                                             |                                                                                          
|Christopher E. D. Hesketh(3)                 |                                                                                          
|Senior Vice President -                      |                                                                                          
|Treasury                                     |                                                                                           | 1,130                                                                                        |                                                  | 34,251                                           |                             | 25,433                    
|                                             |                                                                                          
|Haydeé A. de Cano(4)                         |                                                                                          
|Senior Vice President -                      |                                                                                          
|Administration and Human Resources           |                                                                                           | 1,048                                                                                        |                                                  | 36,450                                           |                             | 29,720                    
|                                             |                                                                                          
|Carlos Yap S.(5)                             |                                                                                          
|Senior Vice President -                      |                                                                                          
|Finance                                      |                                                                                           | 0                                                                                            |                                                  | 30,065                                           |                             | 21,905                    
|                                             |                                                                                          
|Miguel A. Kerbes(6)                          |                                                                                          
|Senior Vice President -                      |                                                                                          
|Risk Management                              |                                                                                           | 0                                                                                            |                                                  | 2,500                                            |                             | 0                         
|                                             |                                                                                          
|Joaquín Uribe                                |                                                                                          
|Senior Vice President -                      |                                                                                          
|Processes, Technology and Operations         |                                                                                           | 0                                                                                            |                                                  | 0                                                |                             | 0                         

---

|(1) |  | Mr. Castañeda retired as Chief Executive
      Officer on December 31, 2003 and as director of the Bank effective January
      1, 2004. Mr. Castanedas stock options under the 1995 Stock Option
      Plan were granted in the following allocations: 18,000 on October 13, 1995,
      14,000 on January 31, 1997, 14,000 on February, 1998, 4,666 on February
      4, 1999 and 4,982 on February 4, 2000; and under the 1999 Stock Option Plan
      in the following allocations: 6,526 on February 4, 2000, and 14,000 on February
      6, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Mr. Amaral resigned as a director of the Bank
      effective February 4, 2004 in connection with his becoming an executive
      officer of the Bank.                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) |  | Mr. Heskeths stock options under the
      1995 Stock Option Plan were granted in the following allocations: 7,700
      on October 13, 1995, 6,000 on January 31, 1997, 7,000 on February 6, 1998,
      2,500 on February 4, 1999 and 2,233 on February 4, 2000; and under the 1999
      Stock Option Plan in the following allocations: 4,150 on February 4, 2000,
      and 7,000 on February 6, 2001.                                                                                                                                             
|(4) |  | Ms. de Canos stock options under the
      1995 Stock Option Plan were granted in the following allocations: 8,350
      on October 13, 1995, 6,500 on January 31, 1997, 6,600 on February 6, 1998,
      4,000 on February 4, 1999 and 4,270 on February 4, 2000; and under the 1999
      Stock Option Plan in the following allocations: 2,730 on February 4, 2000,
      and 6,000 on February 6, 2001. Ms. de Cano resigned as Senior Vice President,
      Administration and Human Resources in April 2004.                                      
|(5) |  | Mr. Yaps stock options under the 1995
      Stock Option Plan were granted in the following allocations: 5,234 on October
      13, 1995, 6,000 on January 31, 1997, 6,000 on February 6, 1998, 2,333 on
      February 4, 1999 and 2,338 on February 4, 2000; and under the 1999 Stock
      Option Plan in the following allocations: 3,492 on February 4, 2000, and
      7,000 on February 6, 2001.                                                                                                                                                 
|(6) |  | Mr. Kerbes ́s stock options under the
      1999 Stock Option Plan were granted in February 6, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                      

The
following table includes information regarding ownership of the Banks shares by
members of its Board of Directors, restricted shares held under the Board Restricted Stock
Plan and options received under the Board Plan.



| | 78 | 
| | -- | 



---





|Name of Director           | Number of Shares
      Beneficially Owned as
      of December 31, 2003
      (1) | Number of Shares that may
      be Acquired within 60 Days
      of December 31, 2003 | Options under
      the Board
      Plan (2) | Restricted Shares
      held under Board
      Restricted Stock
      Plan
|-------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------------------------------------
|                          
|Rubens Amaral(3)           |                                                                                   | 0                                                                                     |                                              | 304                                                                       
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Guillermo Güémez García(4) |                                                                                   | 0                                                                                     |                                              | 0                                                                         
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Santiago Perdomo Maldonado |                                                                                   | 1,005                                                                                 |                                              | 0                                                                         
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Ernesto A. Bruggia(5)      |                                                                                   | 1,005                                                                                 |                                              | 304                                                                       
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Emilio Garofalo Filho(6)   |                                                                                   | 1,005                                                                                 |                                              | 0                                                                         
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Will C. Wood               |                                                                                   | 3,505                                                                                 |                                              | 304                                                                       
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Sebastiao Toledo Cunha(7)  |                                                                                   | 1,005                                                                                 |                                              | 456                                                                       
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Mario Covo                 |                                                                                   | 1,005                                                                                 |                                              | 304                                                                       
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|José Castañeda(8)          |                                                                                   | 42,726                                                                                |                                              | 0                                                                         
|                           |                                                                                   |                                                                                       |                                              |                                                                           
|Gonzalo Menéndez Duque     |                                                                                   | 1,507                                                                                 |                                              | 304                                                                       

---

|(1) |  | Includes class E shares held under the Board Restricted
      Stock Plan.                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | This column does not include 304 options granted in February
      2001 to Valentín Hernández, a former member of the Board of Directors.                                                                                                                                                             
|(3) |  | Mr. Amaral resigned as a director effective February 4,
      2004 in connection with his becoming an executive officer of the Bank. 1,005
      class E shares representing Mr. Amarals entitlement under the Board
      Restricted Stock Plan were issued to his employer Banco do Brasil in 2003.
|(4) |  | 1,005 class E shares representing Mr. Güémez
      García ́s entitlement under the Board Restricted Stock Plan were
      issued to his employer Banco de México in 2003.                                                                                                                              
|(5) |  | Mr. Bruggias term as a class B director ended at
      the Annual Meeting as a result of his class B directorship being forfeited
      to the class E shareholders. In April 14, 2004 the Board of Directors appointed
      Mr. Bruggia as Treasurer.                                              
|(6) |  | Mr. Garofalos term as a class B director ended at
      the Annual Meeting as a result of his class B directorship being forfeited
      to the class E shareholders.                                                                                                                                
|(7) |  | Mr. Cunhas term as a class E director expired with
      the Annual Meeting and he did not stand for re-election.                                                                                                                                                                                    
|(8) |  | Mr. Castañeda resigned as a director effective January
      1, 2004 in connection with his retirement as Chief Executive Officer on
      December 31, 2003.                                                                                                                                         

For
additional information regarding stock options granted to executive officers and
Directors, see Note 16 to Consolidated financial statements of the Bank for the
fiscal year ended December 31, 2003.

Certain
directors of the Bank are executive officers of banks and/or other financial institutions
located in Latin America, the Caribbean and elsewhere. Some of these banks and/or other
financial institutions own shares of the Banks common stock and have entered into
loan transactions with the Bank in the ordinary course of business. The terms and
conditions of such loan transactions, including interest rates and collateral
requirements, are substantially the same as the terms and conditions of comparable loan
transactions entered into with other persons under similar market conditions. As a matter
of policy, directors of the Bank do not participate in the approval process for credit
facilities extended to institutions of which they are executive officers or directors nor
do they participate with respect to decisions regarding country exposure limits in
countries in which such institutions are domiciled.



| | 79 | 
| | -- | 

---



# 6.C
  Board Practices

Corporate
Governance

The
  Bank has included the information regarding its corporate governance practices
  necessary to comply with Section 303A of the New York Stock Exchanges
  Listed Company Manual/Corporate Governance Rules on its website (www.blx.com).

The
Board of Directors consists of ten members (each, a Director) in accordance
with the Banks Articles of Incorporation. Pursuant to an amendment to the 2000
Amended and Restated Articles of Incorporation approved by the holders of the Banks
common stock at the Banks 2002 Annual Meeting, the total number of members of the
Board of Directors was increased on April 16, 2002 from nine (9) Directors to ten (10)
Directors. Consequently, the Board of Directors currently consists of three (3) Class A
Directors, two (2) Class B Directors, three (3) Class E Directors and two (2) Directors
representing the holders of all classes of shares of the Banks common stock. Members
of the Board of Directors are elected at annual meetings of stockholders of the Bank and
each Director serves a term of three years. The terms of office of the Directors are
staggered in order to provide for continuity on the Board of Directors. In the elections
of Directors representing a particular class of shares of the Banks common stock,
the votes of the holders of such class of shares are counted separately as a class. The
holders of each class of common stock have cumulative voting rights with respect to the
election of Directors representing such class.

Pursuant
to the Articles of Incorporation if on the first working day of each year, starting from
the year 2001, the number of Class B shares is lower than 20%, but equal or higher than
10%, of the total of all issued and outstanding shares as a result of their conversion
into Class E shares, the holders of Class B shares will lose the right to elect one
Director. If this occurs, the holders of Class E shares will acquire the right to appoint
an additional Director. Furthermore, if on the first working day of each year beginning
with the year 2001, the amount of Class B shares outstanding is lower than 10% of the
total of all issued and outstanding shares, the holders of Class B shares will lose the
right to elect Directors and the holders of Class E shares will acquire the right to
appoint a second additional Director. At December 31, 2003, the amount of Class B shares
represented 8.8% of the total of all issued and outstanding shares. Consequently, during
the stockholders meeting held in April 2004,two of the three class E directors were
elected to class E directorships to represent positions held by representatives of the
Banks class B shares which were forfeited to the class E shareholders as a result of
the class B shares falling below 10% of the Banks total outstanding shares of common
stock.

The
following table sets forth the names and countries of citizenship of the Banks
dignatarios, as of the date hereof, their current office or position with other
institutions and their current office or position with the Bank. Dignatarios are
elected annually by the members of the Board. Dignatarios attend meetings of the
Board, participate in discussions and offer advice and counsel to the Board, but do not
have the power to vote (unless they are also directors of the Bank).

|Name                                                                    |  | Country of  
      Citizenship |  | Position held by Dignatario
       
      with the Bank
|----------------------------------------------------------------------- |  | ------------------------------ |  | -------------------------------------------------------
|Gonzalo Menéndez Duque  
      Director,  
      Banco de Chile         |  | Chile                          |  | Chairman of the Board                                  
|                                                                        |  |                                |  |                                                        
|Ricardo Manuel Arango  
      Partner,  
      Arias, Fábrega & Fábrega |  | Panama                         |  | Secretary                                              



| | 80 | 
| | -- | 



---

|Name                                                                                |  | Country of  
      Citizenship |  | Position held by Dignatario
       
      with the Bank
|----------------------------------------------------------------------------------- |  | ------------------------------ |  | -------------------------------------------------------
|Ernesto A. Bruggia*  
      Director,  
      Banco de la Provincia de Buenos Aires |  | Argentina                      |  | Treasurer                                              
|                                                                                    |  |                                |  |                                                        
|Jaime Rivera**  
      Chief Executive Officer  
      BLADEX                       |  | Guatemala                      |  | Chief Executive Officer                                

|* |  | Mr.
Ernesto A. Bruggia was appointed Treasurer in April 2004 by the Board of Directors.
|- |  | ---------------------------------------------------------------------------------------

|** |  | Mr.
José Castañeda retired on December 31, 2003 and Mr. Jaime Rivera became Chief
Executive Officer as of January 1, 2004.
|-- |  | --------------------------------------------------------------------------------------------------------------------------

Committees of the
Board of Directors

The
Board of Directors, pursuant to the powers granted to it under the Banks Articles of
Incorporation, has established several committees to delegate its oversight duties in
respect of the Banks operations. These committees are: the Audit Committee, the Credit
Policy and Risk Assessment Committee, the Nomination and Compensation Committee and the
Assets and Liabilities Committee.

During
the fiscal year ended December 31, 2003, the Board held ten meetings. On average,
directors attended approximately 91% of the total number of Board meetings held during
the fiscal year ended December 31, 2003.

The
following table set forth the four Committees established by the Board, the current
number of members of each Committee and the total number of meetings held by each
Committee during the fiscal year ended December 31, 2003:

|                                            |  |                                  
|------------------------------------------- |  | ---------------------------------
|                                           
|Committee                                   |  | Number  
      of  
      members
|                                           
|Audit Committee                             |  | 5                                
|                                           
|Credit Policy and Risk Assessment Committee |  | 5                                
|                                           
|Assets and Liabilities Committee            |  | 4                                
|                                           
|Nomination and Compensation Committee       |  | 4                                
|                                           

The
Board of Directors met on April 14, 2004 and new directors were elected to comprise the
Committees of the Board.

Audit Committee

The
Audit Committee is a standing Committee of the Board of Directors. According to its
Charter, the Audit Committee must be comprised of at least three directors. The members of
the Audit Committee at December 31, 2003 were Will C. Wood (Chairman of the Committee),
Gonzalo Menéndez Duque, Sebastiao G. Toledo Cunha, Santiago Perdomo Maldonado and
Emilio Garofalo.

As
of April 14, 2004, the members of the Audit Committee are Will C. Wood (Chairman of the
Committee), Alexandre Lodygensky, Gonzalo Menéndez Duque and Santiago Perdomo.

All
members of the Audit Committee must be independent directors, as determined by the Board,
and at least one director must be a financial expert. No member of the Audit Committee can
be an employee of the Bank. The Banks Board of Directors has determined that all
members of the Audit Committee are independent and that at least one of its members is a
financial expert. The Audit Committees financial expert is Gonzalo Menéndez
Duque.



| | 81 | 
| | -- | 



---

In
fulfillment of its oversight obligations and in accordance with the regulations of the
Superintendency of Banks of Panama, the Audit Committee met seven times during the fiscal
year ended December 31, 2003.

The
Audit Committee reviewed and recommended to the Board of Directors that the Audited
Consolidated Financial Statements of the Bank for the year ended December 31, 2003 be
included in the Banks Annual Report. The Audit Committee also recommended to the
Board of Directors that it retain KPMG Peat Marwick Panama as its external independent
auditors for the fiscal year ending December 31, 2004. The aggregate amounts of fees paid
by the Bank to its independent auditors in connection with external audit and non-audit
services for the fiscal year ended December 31, 2003 were approximately $484,717 and
$86,203, respectively, see Item 16.C Principal Accountant Fees and Services.

According
to its Charter, the Audit Committees main oversight responsibilities include the
following:

| |  |  | Recommend the selection and appointment of the independent auditors to the Board of
Directors, review the scope and plan of the independent audit, approve the type of
services (including non-audit services) to be rendered by the independent auditors and the
fees to be paid, and monitor the independence of the external auditors.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Review the accounting policies used in the preparation of the Banks Consolidated
Financial Statements, the quality of the accounting principles used and any significant
accounting developments and issues and possible impact of any substantial changes.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Review together with management and independent auditors the Banks interim
Consolidated Financial Statements, the annual Consolidated Financial Statements, the
annual report on Form 20-F and any financial information, which is to be released to the
public.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Review together with management the adequacy of the Banks system of internal
controls to assure the integrity of financial reporting, safeguarding of assets and
compliance with laws and regulations.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Review with management to satisfy itself that management has appropriate procedures,
practices and processes in place to reasonably assure adherence to policies and limits
relating to the assumption of risks, and that the risks assumed by the Bank are
appropriately reflected in the books and records.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Review
the Banks compliance with its Code of Ethical Conduct.
| | - |  | --------------------------------------------------------------

| |  |  | Review
and evaluate the adequacy of the work performed by the Controller, the Chief Auditor and
the Compliance Officer.
| | - |  | -----------------------------------------------------------------------------------------------------------------------

The
Charter of the Audit Committee requires an annual self-evaluation of the Committees
performance.

Credit Policy
  and Risk Assessment Committee

The
Credit Policy and Risk Assessment Committee is a standing Committee of the Board of
Directors. The members of the Credit Policy and Risk Assessment Committee at December 31,
2003 were Guillermo Güémez García (Chairman of the Committee),
Gonzalo Menéndez Duque, Ernesto A. Bruggia, Sebastiao G. Toledo Cunha and Will C.
Wood.

As
of April 14, 2004, the members of the Credit Policy and Risk Assessment Committee are
Guillermo Guémez García (Chairman of the Committee), Herminio Blanco,
Alexandre Lodygensky, Gonzalo Menéndez Duque and Will C. Wood. No member of the
Credit Policy and Risk Assessment Committee can be an employee of the Bank.



| | 82 | 
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---

The
Credit Policy and Risk Assessment Committee is in charge of reviewing and recommending to
the Board of Directors all the credit policies and procedures related to the adequate
management of the Banks assets. The Committee also reviews the quality and profile
of the Banks credit assets and the risk levels assumed by the Bank. The
Committees responsibilities also include, among others, the review and submission to
the Board for approval of the country limits and limits exceeding delegated authority and
of the adequacy of credit reserves.

The
Committee carries out its duties by way of reviewing periodic reports, which it receives
from management, and by way of its interaction with risk management and other members of
the Banks management team. The Committee meets at least four times per year. During
the fiscal year ended December 31, 2003, the Committee held five meetings.

Nomination
  and Compensation Committee

The
  Nomination and Compensation Committee is a standing Committee of the Board of
  Directors. The members of the Nomination and Compensation Committee at December
  31, 2003 were Rubens Amaral (Chairman of the Committee), Mario Covo, Ernesto
  A. Bruggia and Guillermo Güémez García.

As
of April 14, 2004, the members of the Nomination and Compensation Committee are Santiago
Perdomo Maldonado (Chairman of the Committee), Mario Covo, Maria da Graça
França and William Hayes. No member of the Nomination and Compensation Committee
can be an employee of the Bank. Three members of the Nomination and Compensation Committee
are independent directors.

The
Committee meets at least four times per year. During the fiscal year ended December 31,
2003, the Committee held four meetings.

The
Nomination and Compensation Committees primary responsibilities are to assist the
Board of Directors by identifying candidates to become Board members and recommending
nominees for annual meetings of stockholders; by making recommendations to the Board of
Directors concerning candidates for Chief Executive Officer and other senior management
and counseling on succession planning for senior management; by recommending compensation
for Board members and Committee members, including cash and equity compensation; by
recommending compensation for senior management and employees of the Bank, including cash
and equity compensation, and policies for senior management and employee benefit programs
and plans; by reviewing and recommending changes to the Banks Code of Ethics; and by
advising senior management on issues related to the Banks personnel.

The
Charter of the Nomination and Compensation Committee requires an annual self-evaluation of
the Committees performance.

Assets and
  Liabilities Committee

The
Assets and Liabilities Committee is a standing Committee of the Board of Directors. The
members of the Assets and Liabilities Committee at December 31, 2003 were Mario Covo
(Chairman of the Committee), Rubens Amaral, Santiago Perdomo Maldonado and Emilio
Garofalo.

As
of April 14, 2004, the members of the Assets and Liabilities Committee are Mario Covo
(Chairman of the Committee), Herminio Blanco, Maria da Graça França,
Guillermo Guémez and William Hayes. No member of the Assets and Liabilities
Committee can be an employee of the Bank.

The
Assets and Liabilities Committee is responsible for reviewing and recommending to the
Board of Directors all policies and procedures related to the management of the
Banks assets and liabilities. The Committee also coordinates disbursement and
funding activities to enhance earnings and to reduce risks. As part of its
responsibilities, the Committee reviews and recommends to the Board of Directors, among
others, policies related to the Banks liquidity, mismatch between assets and
liabilities, investment of liquidity, derivative positions, and future funding strategies.



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---

The
Assets and Liabilities Committee carries out its duties by way of reviewing periodic
reports, which it receives from management, and by way of its interaction with the Senior
Vice President, Treasury and other members of the Banks management team. The
Committee meets at least four times per year. During the fiscal year ended December 31,
2003, the Committee held four meetings.

Advisory Council

The
Advisory Council was created by the Board in April 2000 pursuant to the powers granted to
the Board under the Banks Articles of Incorporation. The duties of Advisory Council
members consist primarily of providing advice to the Board with respect to the business of
the Bank in their areas of expertise. Each member of the Advisory Council receives $5,000
for each Advisory Council meeting attended. The aggregate amount of fees paid by the Bank
during the fiscal year ended December 31, 2003 for services rendered by the Advisory
Council during 2003 was $60,000. During the fiscal year ended December 31, 2003, the
Advisory Council met twice. The Advisory Council meets only when it is convened by the
Board of Directors.

The
following table sets forth the names, positions and countries of citizenship of the
members of the Advisory Council of the Bank.

|                                |  |                                                                 
|------------------------------- |  | ----------------------------------------------------------------
|Name                            |  | Position                                                        
|
|Luis Pagani                     |  | PresidentArcor S. A. I. C                                       
|
|                                |  |                                                                 
|Roberto Teixeira da
      Costa |  | Board MemberGrupo Sul America, S.A                              
|
|                                |  |                                                                 
|Carlos Martabit                 |  | General Manager, Finance
      DivisionBanco del Estado de Chile
|
|                                |  |                                                                 
|Eugenio Clariond                |  | Chief Executive OfficerGrupo Imsa, S. A. de C. V.               
|
|                                |  |                                                                 
|Alberto Motta, Jr               |  | Vice PresidentInversiones Bahia Ltd.                            
|
|                                |  |                                                                 
|Alfredo Riviere                 |  | PresidentSural, C. A.                                           
|

# 6.D
  Employees

As
of December 31, 2003, the total number of permanent employees was 155, which were
geographically distributed as follows: Head Office in Panama: 140; New York Agency: 6;
Representative Office in Argentina: 3; Representative Office in Brazil: 4; and
Representative Office in Mexico: 2.

# 6.E
  Share Ownership

As
of December 31, 2003, the Banks executive officers, directors, and Advisory Council
members, as a group, owned an aggregate of 89,227 class E shares, which was 0.3% of all
issued and outstanding class E shares.



| | 84 | 
| | -- | 



---

For
details of the options on the Banks common shares held by members of the Banks
Board of Directors and Senior Management, see Item 6.B Compensation.

# Item
  7.  Major Shareholders and Related Party Transactions

# 7.A
  Major Shareholders

As
of December 31, 2003, the Bank was not directly or indirectly owned or controlled by
another corporation or any foreign government, and no person was the registered owner of
more than 9% of the total outstanding shares of voting capital stock of the Bank.

The
following table sets forth information regarding the Banks shareholders that are the
beneficial owners of 5% or more of any one class of the total outstanding shares of voting
capital stock of the Bank, at December 31, 2003:

| |                                                   |                      |  |            |            |       |  
| | ------------------------------------------------- | -------------------- |  | ---------- | ---------- | ----- | -
| |                                                   | At December 31, 2003
| |                                                  
| | Class A                                           | Number of Shares     |  | % of Class | % of Total
| |                                                  
| | Banco de la Nación Argentina                      | 1,045,348.00         |  | 16.5       |            | 2.7   |  
| | Banco do Brasil                                   | 974,551.00           |  | 15.4       |            | 2.5   |  
| | Banco de Comercio Exterior de Colombia,
      S.A | 488,547.00           |  | 7.7        |            | 1.2   |  
| | Banco de la Nación Peru                           | 446,556.00           |  | 7.0        |            | 1.1   |  
| | Banco Central del Paraguay                        | 434,658.00           |  | 6.9        |            | 1.1   |  
| | Banco Central del Ecuador                         | 431,217.00           |  | 6.8        |            | 1.1   |  
| | Banco del Estado de Chile                         | 323,412.75           |  | 5.1        |            | 0.8   |  
| |                                                   |                      |  |            |            |       |  
| | Total Shares of Class A Common Stock              | 6,342,189.16         |  | 100.0      | %          | 16.1  | %
| |                                                   |                      |  |            |            |       |  
| |                                                   |                      |  |            |            |       |  
| |                                                  
| | Class B                                           | Number of Shares     |  | % of Class | % of Total
| |                                                  
| | Banco de la Provincia de Buenos
      Aires       | 884,460.98           |  | 25.5       |            | 2.2   |  
| | Banco de la Nación Argentina                      | 295,944.50           |  | 8.5        |            | 0.8   |  
| | Mizuho Corporate Bank Ltd.                        | 294,345.00           |  | 8.5        |            | 0.7   |  
| |                                                   |                      |  |            |            |       |  
| | Total Shares of Class B Common Stock              | 3,466,701.95         |  | 100.0      | %          | 8.8   | %
| |                                                   |                      |  |            |            |       |  
| |                                                   |                      |  |            |            |       |  
| |                                                  
| | Class E*                                          | Number of Shares     |  | % of Class | % of Total
| |                                                  
| | Farallon Capital Management                       | 3,296,012.00         |  | 11.2       |            | 8.4   |  
| | Artisan Partners LP.                              | 2,372,614.00         |  | 8.0        |            | 6.0   |  
| | Fidelity Management                               | 2,094,112.00         |  | 7.1        |            | 5.3   |  
| | Wellington Management                             | 1,695,652.00         |  | 5.7        |            | 4.3   |  
| |                                                   |                      |  |            |            |       |  
| | Total Shares of Class E Common Stock              | 29,543,847.00        |  | 100.0      | %          | 75.1  | %
| |                                                   |                      |  |            |            |       |  
| |                                                  
| | Total Shares of Common Stock                      | 39,352,738.11        |  |            |            | 100.0 | %
| |                                                   |                      |  |            |            |       |  
| |                                                  
| |                                                  

|* |  | Source: Schedule 13G filings
      with the Securities and Exchange Commission.
|- |  | -------------------------------------------------------------------------------

All
common shares have the same rights and privileges regardless of their class, except that:
(i) the affirmative vote of three-quarters (3/4) of the issued and outstanding Class A
shares is required (A) to dissolve and liquidate the Bank, (B) to amend certain material
provisions of the Amended and Restated Articles of Incorporation, (C) to merge or
consolidate the Bank with another entity and (D) to authorize the Bank to engage in
activities other than those described as the purposes of the Bank in its Amended and
Restated Articles of Incorporation; (ii) the Class E shares and the preferred shares are
freely transferable, while the Class A shares and Class B shares can only be transferred
to qualified holders; (iii) the Class B shares may be converted into Class E shares; (iv)
the holders of Class A shares and Class B shares benefit from pre-emptive rights, but the
holders of Class E common shares do not; and (v) the classes vote separately for their
respective Directors.

As
of December 31, 2003, there were no Class A shares held by institutions located in the
United States. At December 31, 2003, 4.4% of the total Class B shares outstanding were
held by institutions located in the United States, representing 0.4% of the Banks
total common shares. Because a majority of Class E shares are held by or in the name of
the Depository Trust Company, the Bank does not have precise information regarding Class E
shareholders in this regard.



| | 85 | 
| | -- | 



---

# 7.B
  Related Party Transactions

Certain
directors of the Bank are executive officers of banks and/or other financial institutions
located in Latin America, the Caribbean and elsewhere. Some of these banks and/or other
financial institutions own shares of the Banks common stock and have entered into
loan transactions with the Bank in the ordinary course of business. The terms and
conditions of such loan transactions, including interest rates and collateral
requirements, are substantially the same as the terms and conditions of comparable loan
transactions entered into with other persons under similar market conditions. As a matter
of policy, Directors of the Bank do not participate in the approval process for credit
facilities extended to institutions of which they are executive officers or directors nor
do they participate with respect to decisions regarding country exposure limits in
countries in which such institutions are domiciled.

At
December 31, 2003, the Bank did not have any outstanding credit exposure with related
parties as defined by the Panamanian Superintendency of Banks.

# 7.C
  Interests of Experts and Counsel

Not
  required in this Annual Report.

# Item
  8. Financial Information

# 8.A
  Consolidated Statements and Other Financial Information

See
  Item 19.

Dividends

The
Board of Directors, at a meeting held on February 5, 2001, declared a quarterly dividend
of $0.47 per common share. This dividend was payable on March 5, 2001 to stockholders of
record as of February 22, 2001. At the same meeting, the Board of Directors also declared
a quarterly cash dividend of $0.84 per preferred share, payable in two equal installments
on May 15, 2001 and November 15, 2001 to preferred stockholders of record as of February
22, 2001 and October 31, 2001, respectively.

The
Board of Directors, at a meeting held on April 26, 2001, declared a regular quarterly cash
dividend of $0.47 per common share. This dividend was payable on May 29, 2001 to
stockholders of record as of May 18, 2001. At the same meeting, the Board of Directors
also declared a regular quarterly cash dividend of $0.84 per preferred share, payable on
May 15, 2001 to preferred stockholders of record as of April 30, 2001.

The
Board of Directors, at a meeting held on July 23, 2001, declared a regular quarterly cash
dividend of $0.47 per common share. This dividend was payable on August 30, 2001 to
stockholders of record as of August 20, 2001. At the same meeting, the Board of
Directors also declared a regular quarterly cash dividend of $0.84 per preferred share,
payable on August 14, 2001 to preferred stockholders of record as of July 31, 2001.

The
Board of Directors, at a meeting held on November 9, 2001, declared a regular quarterly
cash dividend of $0.47 per common share. This dividend was payable on December 6, 2001 to
stockholders of record as of November 23, 2001. At the same meeting, the Board of
Directors also declared a regular quarterly cash dividend of $0.84 per preferred share,
payable on December 20, 2001 to preferred stockholders of record as of December 6, 2001.

On
February 5, 2002, the Board of Directors suspended dividends on common shares, believing
that it was in the best interest of shareholders to conserve the Banks capital
resources until the probable outcome of the Banks exposure to Argentina was clearer.
No dividends were declared on common shares in 2003.



| | 86 | 
| | -- | 



---

During
2003, the Bank paid cash dividends in the aggregate amount of $852,990 to the holders of
its preferred shares representing $0.80 per preferred share.

The
Board of Directors at a meeting held on February 3, 2004 authorized a dividend policy
whereby dividends will be declared and paid to shareholders on a quarterly basis. In
accordance with this new policy, the Board of Directors declared an annual dividend of
$0.40 per common share payable on a quarterly basis. At the same meeting the Board of
Directors declared a quarterly cash dividend of US$0.10 per common share payable on April
5, 2004 to stockholders of record as of March 26, 2004. In April 5, 2004, the Bank paid
cash dividends in the aggregate amount of $3,935,273.81 to the holders of its common
shares.

# 8.B
  Significant Changes

Not
  applicable

# Item
  9. The Offer and Listing

# 9.A
  Offer and Listing Details

On
October 1, 1992, the Bank concluded a public offering in the United States of 4,000,000
Class E shares with no par value. On December 22, 1994, the Bank concluded another
offering of 3,200,000 Class E shares. On June 27, 2003 the Bank sold 1,431,004
Class A shares, 652,997 Class B shares and 19,915,999 Class E shares
in a rights offering to its existing shareholders. The Class E shares are listed on the
New York Stock Exchange under the symbol BLX. The following table shows the high and low
sales prices of the Class E shares on the New York Stock Exchange for the periods
indicated.

| |                |                                      |  |       | 
| | -------------- | ------------------------------------ |  | ----- | 
| |                | Price per Class
      E Share (in $) | 
| |                | High                                 |  | Low   | 
| | 1999           | 34.13                                |  | 16.19 | 
| | 2000           | 34.88                                |  | 21.25 | 
| | 2001           | 37.70                                |  | 25.30 | 
| | 2002           | 29.70                                |  | 2.00  | 
| | 2003           | 19.95                                |  | 4.01  | 
| |                |                                      |  |       | 
| | 2002:          |                                      |  |       | 
| | First Quarter  | 29.70                                |  | 15.50 | 
| | Second Quarter | 22.25                                |  | 11.40 | 
| | Third Quarter  | 12.50                                |  | 2.00  | 
| | Fourth Quarter | 5.00                                 |  | 2.08  | 
| | 2003:          |                                      |  |       | 
| | First Quarter  | 6.54                                 |  | 4.01  | 
| | Second Quarter | 9.95                                 |  | 5.24  | 
| | Third Quarter  | 12.45                                |  | 7.90  | 
| | Fourth Quarter | 19.95                                |  | 12.00 | 
| | 2004:          |                                      |  |       | 
| | First Quarter  | 19.23                                |  | 15.20 | 
| |               



| | 87 | 
| | -- | 



---

| |          |                                  |  |       | 
| | -------- | -------------------------------- |  | ----- | 
| |          | Price Class
      E Share (in $) | 
| |          | High                             |  | Low   | 
| | 2003:    |                                  |  |       | 
| | October  | 15.30                            |  | 12.00 | 
| | November | 16.80                            |  | 14.25 | 
| | December | 19.95                            |  | 15.84 | 
| | 2004:   
| | January  | 19.23                            |  | 16.00 | 
| | February | 17.89                            |  | 15.20 | 
| | March    | 18.50                            |  | 17.04 | 
| |         

# 9.B
  Plan of Distribution

Not
required in this Annual Report.

# 9.C
  Markets

The
Banks Class A shares and Class B shares were sold in private placements or in the
Banks 2003 rights offering, are not listed on any exchange and are not publicly traded.
The Banks Class E shares, which constitute the only class of shares publicly traded,
represent approximately 75.1% of the total shares of the Banks common stock issued
and outstanding at December 31, 2003.

9.D
  Selling Shareholders

Not
required in this Annual Report.

9.E
  Dilution

Not required
in this Annual Report.

9.F
  Expenses of the Issue

Not
required in this Annual Report.

# Item
  10. Additional Information

# 10.A
  Share Capital

Not
required in this Annual Report.

# 10.B
  Memorandum and Articles of Association

Articles of
Incorporation

BLADEX
is a Bank organized under the laws of the Republic of Panama, registered in the
Mercantile Section (Persons) of the Public Registry of the Republic of Panama at file
card 021666, roll 1050, image 0002. Article 2 of BLADEXs Articles of Incorporation
states that the purpose of the Bank is to promote the economic development of Latin
American countries, mainly by promoting foreign trade. For the attainment of this
purpose, the Bank may: (1) establish a Latin American credit system for the export of
goods and services, which shall include granting direct export loans, including financing
the stages prior to and after export; (2) foster a market for bank acceptances extended
as a result of operations pertaining to the export of goods of Latin American origin; (3)
promote the establishment of a Latin American system of export credit insurance and
mechanisms that may supplement existing national systems; (4) collaborate with Latin
American countries in conducting market research, with a view to promoting their exports
of goods and services; and (5) generally engage in any kind of



| | 88 | 
| | -- | 



---

banking or financial business
intended to promote the development of Latin American countries. The Articles of
Incorporation provide that BLADEX may also engage in activities other than those
described above, provided that it has obtained the approval of the shareholders in a
resolution adopted by the affirmative vote of one-half (1/2) plus one of the common
shares, either present or represented, in a meeting of shareholders called to obtain such
authorization, which affirmative vote shall necessarily include the vote of three-fourths
(3/4) of Class A shares issued and outstanding.

BLADEXs
Articles of Incorporation provide that the Board of Directors shall direct and control the
business and assets of the Bank, except for those matters specifically reserved to
shareholders by law or the Articles of Incorporation. The Board of Directors may, however,
grant general and special powers of attorney, authorizing directors, officers and
employees of the Bank or other persons to transact such business and affairs within the
competence of the Board of Directors, as the Board of Directors may deem convenient to
entrust to each of them. The Articles of Incorporation of BLADEX do not contain provisions
limiting the ability of the Board of Directors to approve a proposal, arrangement or
contract in which a Director is materially interested, or a provision which limits the
ability of the Board of Directors to fix the compensation of its members, a provision
which requires the mandatory retirement of a Director at any prescribed age or a provision
which requires that a certain number of shares be owned by a person to qualify as a
Director.

The
Board of Directors consists of ten members, as follows: three Directors are elected by the
holders of the Class A shares; two Directors are elected by the holders of the Class B
shares; three Directors are elected by the holders of the Class E shares; and two
Directors are elected by the holders of all of the common shares. Notwithstanding the
foregoing, if due to the conversion of Class B shares, the number of outstanding shares of
this class falls below certain percentages prescribed in the Articles of Incorporation,
holders of Class B shares may lose the right to elect any member of the Board of
Directors. At December 31, 2003, the amount of Class B shares represented 8.8% of the
total of all issued and outstanding shares. Consequently, during the stockholders
meeting held in April 2004, two of the three class E directors were elected to class E
directorships to represent positions held by representatives of the Banks class B
shares which were forfeited to the class E shareholders as a result of the class B shares
falling below 10% of the Banks total outstanding shares of common stock

The
Directors are elected by shareholders for periods of three (3) years and they may be
re-elected. The holders of the Class A, Class B and Class E shares vote separately as a
class for the election of the Directors of the Bank representing such class. For the
election of Directors, the shareholders of each class have a number of votes equal to the
number of shares of such class held by the shareholder multiplied by the number of
Directors to be elected by such class, and the shareholder may cast all of the votes in
favor of one candidate or distribute them among all the Directors to be elected or among
two or more of them, as the shareholder may decide.

All
common shares have the same rights and privileges regardless of their class, except that:
(i) the affirmative vote of three-quarters (3/4) of the issued and outstanding Class A
shares is required (A) to dissolve and liquidate the Bank, (B) to amend certain material
provisions of the Articles of Incorporation, (C) to merge or consolidate the Bank with
another entity and (D) to authorize the Bank to engage in activities other than those
described as the purposes of the Bank in its Articles of Incorporation; (ii) the Class E
shares and the preferred shares are freely transferable, while the Class A shares and
Class B shares can only be transferred to qualified holders; (iii) the Class B shares may
be converted into Class E shares; and (iv) the holders of Class A shares and Class B
shares benefit from pre-emptive rights, but the holders of Class E shares do not; and (v)
the classes vote separately for their representative directors.

Preferred
shares receive a minimum annual preferred dividend of 8% per annum to be declared by the
Board of Directors and to be paid, as any other dividend, in semiannual or quarterly
installments, as prescribed by the Board of Directors. The Bank may not pay any dividend
in cash for common shares in any fiscal year until it has paid the minimum preferred
dividend corresponding to preferred shareholders in that year or in any other previous
year in which the aggregate total dividend corresponding to preferred shares has not been
paid. In the event that the Bank fails to pay the aggregate total amount of the minimum
preferred dividend corresponding to



| | 89 | 
| | -- | 



---

preferred shares in a given fiscal
year, and during the following two years fails to pay the aggregate total amount of the
minimum preferred dividend corresponding to preferred shares in those two following
years, as well as the amount which it had failed to pay in respect of such first year, or
if the Bank fails to make any payment to the sinking fund or fails to redeem any
preferred shares, and provided always that at the time of the occurrence of any of the
above such preferred shares represent at least ten percent (10%) of the total paid in
capital of the Bank, the holders of preferred shares shall be entitled to elect a member
of the Board of Directors, who shall continue in office until the circumstances from
which his appointment has arisen cease to exist. As of the date hereof, the Bank is
current in its payment of dividends to preferred shareholders. Preferred shares have no
voting rights, except for the election of a Director in the event mentioned above.
Preferred shares have no preemptive rights under Article 6 of the Articles of
Incorporation.

The
rights of the holders of the common shares may be changed by an amendment to the Articles
of Incorporation of the Bank. Amendments to the Articles of Incorporation may be adopted
by the affirmative vote of one-half plus one of the common shares represented at the
respective meeting, except for the following amendments which require, in addition, the
affirmative vote of three-quarters (3/4) of all issued and outstanding class A shares: (i)
any amendment to the Banks purposes or powers, (ii) any amendment to the capital
structure of the Bank and the qualifications to become a holder of any particular class of
shares, (iii) any amendment to the provisions relating to the notice, quorum and voting at
shareholders meetings, (iv) any amendment to the composition and election of the
Board of Directors, as well as notices, quorum and voting at meetings of Directors, (v)
any amendments to the powers of the Chief Executive Officer of the Bank and (vi) any
amendments to the fundamental financial policies of the Bank.

The
Articles of Incorporation of BLADEX provide that there will be a general meeting of
holders of the common shares every year, on such date and in such place as may be
determined by resolution of the Board of Directors, to elect Directors and transact any
other business duly submitted to the meeting by the Board of Directors. In addition,
holders of the common shares shall hold extraordinary meetings when called by the Board of
Directors, as it may deem necessary. The Board of Directors or the President of the Bank
must call an extraordinary meeting of holders of the common shares when requested in
writing by one or more holders of common shares representing at least one-twentieth (1/20)
of the issued and outstanding capital. Notice of meetings of shareholders, whether
ordinary or extraordinary, are personally delivered to each registered shareholder or sent
by fax, telex, courier, air mail or any other means authorized by the Board of the
Directors, at least 30 days before the date of the meeting, counted from the date that the
notice is sent. The notice of the meeting must include the agenda of the meeting. At any
meeting of shareholders, shareholders may be represented by a proxy who need not be a
shareholder, and who may be appointed by public or private document, with or without power
of substitution. Whenever the holders of the preferred shares are entitled to vote
pursuant to the Articles of Incorporation, a meeting of the holders of the preferred
shares shall be called by the President of the Bank as soon as possible. Upon request to
the Board of Directors or the President of the Bank, shareholders representing at least
one-twentieth (1/20) of the issued and outstanding shares of any given class may hold a
meeting separately as a class for the purpose of considering any matter which, in
accordance with the provisions of the Articles of Incorporation and the By-laws, is within
their competence. In order to have a quorum at any meeting of shareholders, it is required
that one-half plus one of the common shares issued and outstanding be represented at the
meeting. Whenever a quorum is not obtained at a meeting of shareholders, the meeting shall
be held on the second meeting date set forth in the notice of the meeting with the common
shares represented on such second meeting date. All resolutions of shareholders shall be
adopted by the affirmative vote of one-half plus one of the common shares represented at
the meeting where the resolution was adopted, except for those cases mentioned above that
require a super-majority vote.

Class
A shares may only be issued as registered shares in the name of any of the following
entities in Latin American countries: (i) central banks, (ii) banks in which the State is
the majority shareholder or (iii) other government agencies. Class B shares may only be
issued in the name of banks or financial institutions. Class E shares and preferred shares
may be issued in the name of any person, whether a natural person or a legal entity.



| | 90 | 
| | -- | 



---

Article
11 of the Articles of Incorporation of BLADEX establishes that the adoption of resolutions
approving the merger or consolidation of BLADEX with another entity requires the
affirmative vote of one-half plus one of the common shares represented at the meeting plus
three-quarters (3/4) of all issued and outstanding class A common shares.

Neither
BLADEXs Articles of Incorporation nor its By-laws contains any provision requiring
that any disclosure be made with respect to the ownership of any shareholder above an
ownership threshold.

There
are no conditions imposed by the Articles of Incorporation governing changes in capital,
which are more stringent than required by Panamanian law.

# 10.C
  Material Contracts

On
June 28, 2002, the Bank entered into an agreement with BNP Paribas Securities Corp. and
Deutsche Bank Securities Inc. (together, the Financial Advisors) in which the
Financial Advisors agreed to provide financial advice with respect to the Banks
capital raising plans and ratings-related issues. At December 31, 2002, the direct costs
related to these advisory services were approximately $2.8 million. At December 31, 2002,
the Bank recorded $1.7 million as commitment related to the Financial Advisors services in
connection with the capitalization process.

Besides
the agreement with the Financial Advisors, the Bank has not entered into any other
material contracts outside the ordinary course of business during the two-year period
immediately preceding the date of this Annual Report.

# 10.D
  Exchange Controls

There
are currently no Panamanian restrictions on the export or import of capital, including
foreign exchange controls, and no restrictions on the payment of dividends or interest,
nor are there limitations on the rights of foreign stockholders to hold or vote stock.

# 10.E
  Taxation

The
following is a summary of certain U.S. federal and Panamanian tax matters that may be
relevant with respect to the acquisition, ownership and disposition of Class E shares.
Prospective purchasers of Class E shares should consult their own tax advisors as to the
United States, Panamanian or other tax consequences of the acquisition, ownership and
disposition of Class E shares.

This
summary does not address the consequences of the acquisition, ownership or disposition of
the Banks Class A shares or Class B shares.

United States
Taxes

This
summary describes the principal U.S. federal income tax consequences of the ownership and
disposition of the Class E shares, but does not purport to be a comprehensive description
of all of the tax considerations that may be relevant to holders of Class E shares. This
summary applies only to current holders that hold Class E shares as capital assets and
does not address classes of holders that are subject to special treatment under the United
States Internal Revenue Code of 1986, as amended (the Code), such as dealers
in securities on currencies, financial institutions, tax-exempt entities, regulated
investment companies, insurance companies, securities traders that elect mark to market
tax accounting, persons subject to alternative minimum tax, certain U.S. expatriates,
persons holding Class E shares as part of a hedging, constructive ownership or conversion
transaction or a straddle, holders whose functional currency is not the U.S. dollar, or a
holder that owns 10% or more (directly, indirectly or constructively) of the voting shares
of the Bank.



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This
summary is based upon the Code, existing, temporary and proposed regulations promulgated
thereunder, judicial decisions and administrative procurements, as all in effect on the
date of this Annual Report and which are subject to change (possibly on a retroactive
basis) and to differing interpretations. Purchasers or holders of Class E shares should
consult their own tax advisors as to the U.S. federal, state and local, and foreign tax
consequences of the ownership and disposition of Class E shares in their particular
circumstances.

As
used herein, a U.S. Holder refers to a beneficial holder of Class E shares
that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of
the United States, (ii) a corporation, or an entity treated as a corporation, organized or
created in or under the laws of the U.S. or any political subdivision thereof, (iii) an
estate the income of which is subject to U.S. federal income taxation without regard to
the source of its income, (iv) a trust, if both (A) a court within the United States is
able to exercise primary supervision over the administration of the trust and (B) one or
more U.S. persons (as defined in the Code) have the authority to control all substantial
decisions of the trust, or a trust that has made a valid election under U.S. Treasury
Regulations to be treated as a domestic trust, and (v) any holder otherwise subject to
U.S. federal income taxation on a net income basis with respect to Class E shares
(including a non-resident alien individual or foreign corporation that holds, or is deemed
to hold, any Class E share in connection with the conduct of a U.S. trade or business). In
the case of a holder of Class E shares that is a partnership for U.S. federal income tax
purposes, each partner will take into account its allocable share of income, gain or loss
from the Class E shares, and will take such income, gain or loss into account under the
rules of taxation applicable to such partner, taking into account the activities of the
partnership and the partner.

Taxation of
  Distributions

Subject
to the Passive Foreign Investment Company Status discussion below, to the
extent paid out of current or accumulated earnings and profits of the Bank as determined
under U.S. federal income tax principles (earnings and profits), distributions
made with respect to Class E shares (other than certain pro rata distributions of capital
stock of the Bank or rights to subscribe for shares of capital stock of the Bank) will be
includable in income of a U.S. Holder as ordinary dividend income in accordance with the
U.S. Holders regular method of accounting for U.S. federal income tax purposes
whether paid in cash or Class E shares. To the extent that a distribution exceeds the
Banks earnings and profits, such distribution will be treated, first, as a
nontaxable return of capital to the extent of the U.S. Holders tax basis in the
Class E shares and will reduce the U.S. Holders tax basis in such shares, and
thereafter as a capital gain from the sale or disposition of Class E shares. See
TaxationUnited States TaxesTaxation of Capital Gains. The
amount of the distribution will equal the gross amount of the distribution received by the
U.S. Holder, including any Panamanian taxes withheld from such distribution.

Distributions
made with respect to Class E shares out of earnings and profits generally will be treated
as dividend income from sources outside the United States. U.S. Holders that are
corporations will not be entitled to the dividends received deduction under
Section 243 of the Code with respect to such dividends. Subject to certain conditions and
limitations, Panamanian tax withheld from dividends will be treated as a foreign income
tax eligible for deduction from taxable income or as a credit against a U.S. Holders
U.S. federal income tax liability. Distributions of dividend income made with respect to
Class E shares generally will be treated as passive income or, in the case of
certain U.S. Holders, financial services income, for purposes of computing a
U.S. Holders U.S. foreign tax credit.

Less
than 25 percent of the Banks gross income is effectively connected with the conduct
of a trade or business in the United States, and the Bank expects this to remain true. If
this remains the case, a holder of Class E shares that is not a U.S. Holder (a non-U.S.
Holder) generally will not be subject to U.S. federal income tax or withholding tax
on distributions received on Class E shares that are treated as dividend income for U.S.
federal income tax purposes. Special rules may apply in the case of non-U.S. Holders (i)
that are engaged in a U.S. trade or business, (ii) that are former citizens or long-term
residents of the United States, controlled foreign corporations, foreign
personal holding companies, corporations that accumulate earnings to avoid U.S.
federal



| | 92 | 
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---

income tax, and certain foreign
charitable organizations, each within the meaning of the Code, or (iii) certain
non-resident alien individuals who are present in the United States for 183 days or more
during a taxable year. Such persons should consult their own tax advisors as to the U.S.
federal income or other tax consequences of the ownership and disposition of Class E
shares.

Taxation of
  Capital Gains

Gain
or loss realized by a U.S. Holder on the sale or other disposition of Class E shares will
be subject to U.S. federal income tax as capital gain or loss in an amount equal to the
difference between the U.S. Holders tax basis in the Class E shares and the amount
realized on the disposition. Such gain will be treated as long-term capital gain if the
Class E shares are held by the U.S. Holder for more than one year at the time of the sale
or other disposition. Otherwise, the gain will be treated as a short-term capital gain.
Gain realized by a U.S. Holder on the sale or other disposition of Class E shares
generally will be treated as U.S. source income for U.S. foreign tax credit purposes,
unless the gain is attributable to an office or fixed place of business maintained by the
U.S. Holder outside the United States or is recognized by an individual whose tax home is
outside the United States, and certain other conditions are met. For U.S. federal income
tax purposes, capital losses are subject to limitations on deductibility. As a general
rule, U.S. Holders that are corporations can use capital losses for a taxable year only to
offset capital gains in that year. A corporation may be entitled to carry back unused
capital losses to the three preceding tax years and to carry over losses to the five
following tax years. In the case of noncorporate U.S. Holders, capital losses in a taxable
year are deductible to the extent of any capital gains plus ordinary income of up to
$3,000. Unused capital losses of noncorporate U.S. Holders may be carried over
indefinitely.

A
non-U.S. Holder of Class E shares will generally not be subject to U.S. federal income tax
or withholding tax on gain realized on the sale or other disposition of Class E shares.
Special rules may apply in the case of non-U.S. Holders (i) that are engaged in a U.S.
trade or business, (ii) that are former citizens or long-term residents of the United
States, controlled foreign corporations, foreign personal holding
companies, corporations which accumulate earnings to avoid U.S. federal income tax,
and certain foreign charitable organizations, each within the meaning of the Code, or
(iii) certain non-resident alien individuals who are present in the United States for 183
days or more during a taxable year. Such persons should consult their own tax advisors as
to the United States or other tax consequences of the purchase, ownership and disposition
of the Class E shares.

Passive Foreign
  Investment Company Status

Under
the Code, certain rules apply to an entity classified as a passive foreign
investment company (PFIC). A PFIC is defined as any foreign (i.e.,
non-U.S.) corporation if either (i) 75% or more of its gross income for the taxable year
is passive income (generally including, among other types of income, dividends, interest
and gains from the sale of stock and securities) or (ii) 50% or more of its assets (by
value) produce, or are held for the production of, passive income. The Code provides an
exception for foreign institutions in the active conduct of a banking business, provided
the institution is licensed to do business in the United States. Under Proposed
Regulations, the exception is for active banks licensed by federal or state regulatory
authorities to do business as a bank in the United States, provided the foreign bank is
not prohibited from taking deposits or making loans. Based on its current and intended
method of operations as described herein, the Bank believes that it is not a PFIC under
current U.S. federal income tax law because it is eligible for the exception available to
U.S. licensed banks in the Code and the proposed regulations. The Bank intends to continue
to operate in a manner that will entitle the Bank to rely upon that exception to avoid
classification as a PFIC.

If
the Bank were to become a PFIC for purposes of the Code, unless a U.S. Holder makes the
election described below, a U.S. Holder generally will be subject to a special tax charge
with respect to (a) any gain realized on the sale or other disposition of Class E shares
and (b) any excess distribution by the Bank to the U.S. Holder (generally,
any distributions including return of capital distributions, received by the U.S. Holder
on



| | 93 | 
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---

the Class E shares in a taxable year
that are greater than 125 percent of the average annual distributions received by the
U.S. Holder in the three preceding taxable years, or, if shorter, the U.S. Holders
holding period). Under these rules (i) the gain or excess distribution would be allocated
ratably over the U.S. Holders holding period for the Class E shares, (ii) the
amount allocated to the current taxable year would be treated as ordinary income, (iii) the
amount allocated to each prior year would be subject to tax at the highest rate in effect
for that year; and (iv) interest charge generally applicable to underpayments of tax
would be imposed with respect to the resulting tax attributable to each such prior year.
For purposes of the foregoing rules, a U.S. Holder of Class E shares that uses such stock
as security for a loan will be treated as having disposed of such stock.

If
the Bank were a PFIC, U.S. Holders of interests in a holder of Class E shares may be
treated as indirect holders of their proportionate share of the Class E shares and may be
taxed on their proportionate share of any excess distributions or gain attributable to the
Class E shares. An indirect holder also must treat an appropriate portion of its gain on
the sale or disposition of its interest in the actual holder as gain on the sale of Class
E shares.

If
the Bank were to become a PFIC, a U.S. Holder could make an election, provided the Bank
complies with certain reporting requirements, to have the Bank treated, with respect to
such U.S. Holder, as a qualified electing fund (hereinafter referred to as a
QEF election), in which case, the electing U.S. Holder would be required to
include annually in gross income the U.S. Holders proportionate share of the
Banks ordinary earnings and net capital gains, whether or not such amounts are
actually distributed. If the Bank were to become a PFIC, the Bank intends to so notify
each U.S. Holder and to comply with all reporting requirements necessary for a U.S. Holder
to make a QEF election and will provide to record U.S. Holders of Class E shares such
information as may be required to make such QEF election.

If
the Bank is a PFIC in any year, a U.S. Holder that beneficially owns Class E shares during
such year must make an annual return on Internal Revenue Service Form 8621, which
describes the income received (or deemed to be received if a QEF election is in effect)
from the Bank. The Bank will, if applicable, provide all information necessary for a U.S.
Holder of record to make an annual return on Form 8621.

A
U.S. Holder that owns certain marketable stock in a PFIC may elect to
mark-to-market such stock and, subject to certain exceptions, include in income any gain
(increases in market value) or loss (decreases in market value to the extent of prior
gains recognized) realized as ordinary income or loss to avoid the adverse consequences
described above. U.S. Holders of Class E shares are urged to consult their own tax
advisors as to the consequences of owning stock in a PFIC and whether such U.S. Holder
would be eligible to make either of the aforementioned elections to mitigate the adverse
effects of such consequences.

Information
  Reporting and Backup Withholding

Each
U.S. payor making payments in respect of Class E shares will generally be required to
provide the Internal Revenue Service (the IRS) with certain information,
including the name, address and taxpayer identification number of the beneficial owner of
Class E shares, and the aggregate amount of dividends paid to such beneficial owner
during the calendar year. Under the backup withholding rules, a holder may be subject to
backup withholding at a current rate of 28% with respect to proceeds received on the sale
or exchange of Class E shares within the United States by non-corporate U.S. Holders and
to dividends paid, unless such holder (i) is a corporation or comes within certain other
exempt categories (including securities broker-dealers, other financial institutions,
tax-exempt organizations, qualified pension and profit sharing trusts and individual
retirement accounts), and, when required, demonstrates this fact or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption and otherwise
complies with the applicable requirements of the backup withholding rules. Non-U.S.
Holders are generally exempt from information reporting and backup withholding, but may
be required to provide a properly completed Form W-8BEN (or other similar form) or
otherwise comply with applicable certification and identification procedures in order to
prove their exemption. This backup withholding tax is not an additional tax and any
amounts withheld from a payment to a holder of Class E shares will be refunded (or



| | 94 | 
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---

credited against such holders
U.S. federal income tax liability, if any) provided that the required information is
furnished to the IRS.

There
is no income tax treaty between Panama and the United States.

Panamanian Taxes

The
following summary of certain Panamanian tax matters is based upon the tax laws of Panama
and regulations thereunder in effect as of the date of this Annual Report and is subject
to any subsequent change in Panamanian laws and regulations that may come into effect
after such date. The principal Panamanian tax consequences of ownership of Class E shares
are as follows:

Generally

Panamas
income tax is exclusively territorial. Only income actually derived from sources within
Panama is subject to taxation. Income derived by Panamanian or foreign corporations or
individuals from offshore operations are not taxable. The territorial principle of
taxation has been in force throughout the history of the country and is supported by
legislation, administrative regulations and court decisions.

The
Bank is not subject to income taxes in Panama pursuant to a special exemption granted by
the government of Panama under Law 38 enacted on July 25, 1978. In addition, even in the
absence of such special legislation, under Panamanian law banks are not subject to income
tax on their offshore income. Since the Banks loans are primarily made outside
Panama, the Bank would have limited tax liability even in the absence of special
legislation.

Taxation of
  Distributions

Dividends
and distributions paid by the Bank in respect of its shares are also exempt from
withholding tax under the aforementioned special legislation. If such special legislation
did not exist, Panama would impose a 10% withholding tax on dividends or distributions
paid in respect of the Banks registered shares (20% in respect of the Banks
bearer shares), to the extent such dividends are paid from income derived by the Bank from
Panamanian sources.

Taxation of
  Capital Gains

Inasmuch
as almost all of the Banks income derives from non-Panamanian sources, capital gains
realized by an individual or corporation, regardless of its nationality or residency, on
the sale or other disposition outside of Panama of Class E shares should not be subject to
taxes in Panama. However, there are no rules of allocation with respect to derivation of
income currently in effect in Panama and it cannot be determined with certainty when the
tax authorities would consider that a significant amount of the Banks income derives
from Panamanian sources, thus resulting in the taxation of capital gains realized on the
sale or disposition of the Banks Class E shares.

# 10.F
  Dividends and Paying Agents

Not
  required in this Annual Report.

# 10.G
  Statement by Experts

Not
  required in this Annual Report.



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# 10.H
  Documents on Display

The
Bank will provide without charge to each person to whom this Annual Report is delivered,
upon the written or oral request of such person, a copy of any or all of the documents
listed as exhibits to this Annual Report (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such documents). Written
requests for such copies should be directed to the attention of Carlos Yap, Senior Vice
President  Finance, BLADEX, as follows: (i) if by regular mail, to Apartado 6-1497,
El Dorado, Panama City, Republic of Panama, and (ii) if by courier service, to Calle 50 y
Aquilino de la Guardia, Panama City, Republic of Panama. Telephone requests may be
directed to Mr. Yap at 011-507-210-8581. Written requests may also be faxed to Mr. Yap at
011-507-269-6333 or sent via e-mail to cyap@blx.com. Information is also available on the
Banks website at: www.blx.com.

# 10.I
  Subsidiary Information

Not
  applicable

# Item
  11. Quantitative and Qualitative Disclosure About Market Risk

The
Banks risk management policies, as approved by the Board of Directors from time to
time, are designed to identify and control the Banks credit and market risks by
establishing and monitoring appropriate limits on the Banks credit and market
exposures. Certain members of the Board of Directors constitute the Credit Policy and Risk
Assessment Committee and the Assets and Liabilities Committee, which meet on a regular
basis and monitor and control the risks in each specific area. At the management level,
the Bank has a Risk Management Department that measures and controls the credit and market
exposure of the Bank.

The
Banks primary market risks are comprised of liquidity risk and interest rate risk
and, to a lesser extent, currency exchange risk and price risk.

The
Banks liquidity risk is the risk of not being able to maintain an adequate cash flow
to fund operations and meet obligations and other commitments on a timely basis. The Bank
manages short-term liquidity risk by investing a minimum of 50% of the liquidity funds
generated by demand, call accounts and time deposits in overnight deposits with maturities
of less than one week and by investing the remaining balance in short-term time deposits
with maturities of up to six months and investment funds or negotiable money market
instruments, such as certificates of deposits, commercial paper, bankers acceptances
and other liquid instruments, with maturities of up to 180 days. See Information on
the CompanyInvestment Securities. These instruments must be of investment
grade (carrying two of the following ratings: A-1, P-1 or F-1 from Standard &
Poors, Moodys or Fitch, respectively) and must have a liquid secondary market.
Interbank deposits are placed with reputable international banks located outside of the
Region that usually carry ratings of A-1, P-1 or F-1 by two of the major rating agencies.
These banks must have a correspondent relationship with BLADEX and be approved by the
Board of Directors on an annual basis. The primary objectives for these investments are
security and liquidity. In order to manage its liquidity needs, the Banks liquidity
position is reviewed and monitored on a daily basis by management.

At
December 31, 2003 the Banks interest rate risk aroused from the Banks
asset-sensitive position in the short-term, which means that the Banks
interest-bearing assets reprice more quickly than the Banks interest-earning
liabilities. Consequently, failure to adequately manage this interest rate risk could
adversely affect the Banks net interest income during periods of increasing
interest rates. The Banks interest rate risk is managed by attempting to match the
term and repricing characteristics of the Banks interest rate sensitive assets and
liabilities. The Banks policy with respect to interest rate gaps provides that the
gap between short-term interest-earning assets and interest-bearing liabilities on a
cumulative basis cannot exceed 100% of the Banks total



| | 96 | 
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---

capital. The Banks policy with
respect to interest rate gaps also provides that it match fund interest-earning assets
over 365 days.

The
Bank uses interest rate swaps on a limited basis as part of its interest rate risk
management. These interest rate swaps are made either in a single currency or
cross-currency for a prescribed period to exchange a series of interest rate flows, which
involve fixed for floating rate interest payments. For quantitative information relating
to the Banks interest rate risk and information relating to the Banks
management of interest rate risk, see Liquidity and Capital Resources. and
Note 19 and Note 2(o) of the Notes to Consolidated Financial Statements.

Whenever
possible, foreign-currency-denominated assets are funded with liability instruments
denominated in the same currency. In cases where these assets are funded in different
currencies, forward foreign exchange or cross-currency swap contracts are used to fully
hedge the risk due to this cross-currency funding.

Derivative
Financial Instruments

The
Bank utilizes derivative financial instruments, primarily cross currency swaps, foreign
exchange forward contracts and interest rate swaps to hedge foreign currency risks arising
from the Banks lending activity and the issuance of non-dollar short-term Euro
commercial paper and Euro medium-term notes. The Bank does not engage in derivatives
trading. The Bank also engages in some foreign exchange trades to serve customers
transaction needs and all positions are hedged with an offsetting contract in the same
currency. The Bank manages and controls the risks on these buy and sell foreign currency
contracts by establishing limits on amounts of such contracts and terms by clients, and by
having adopted policies that do not allow it to maintain open positions. Interest rate
swaps are made either in a single currency or cross-currency for a prescribed period to
exchange a series of interest rate flows, which involve fixed for floating interest
payments or vice versa. The Banks policy is not to engage in hedging activities or
maintain derivative positions other than routine swaps to hedge existing normal currency
and interest rate positions.

Types of
Derivative and Foreign Exchange Instruments

Derivative
and foreign exchange instruments negotiated by the Bank are mainly executed
over-the-counter (OTC). These contracts are executed between two counterparts
that negotiate specific agreement terms, including notional amount, exercise price and
maturity. The following instruments are used by the Bank for purposes of asset/liability
activities:

Interest
rate swaps are contracts in which a series of interest rate flows in a single currency
are exchanged over a prescribed period. For accounting purposes, the Bank has designated
these derivative instruments as fair value hedges, cash flow hedges and freestanding
derivatives.

Cross-currency
swaps are contracts that generally involve the exchange of both interest and principal
amounts in two different currencies. For accounting purposes, the Bank has designated
these derivative instruments as fair value hedges.

Forward
foreign exchange contracts represent agreements to transact on a future date at
agreed-upon terms. For accounting purposes, the Bank has not designated a hedging
relationship to these derivative instruments.

Quantitative
information on derivative financial instruments outstanding at December 31, 2003 and 2002
are set forth below:



| | 97 | 
| | -- | 



---

|                    | December 31, 2003 | December 31, 2002 |        
|------------------- | ----------------- | ----------------- | -------
|
|
|Fair Value Hedges:  |                   |                   |        
|Interest rate swaps | $0                | $0                | $0     
|Cross-currency swap | 61,426            | 1,684             | 7,051  
|                   
|Cash Flow Hedges:  
|Interest rate swaps | 60,000            | 0                 | 792    
|                   
|Freestanding:      
|Interest rate swaps | 0                 | 0                 | 0      
|Cross-currency swap | 50,130            | 572               | 5,178  
|Foreign exchange   
|forward contracts   | 0                 | 0                 | 0      
|                    |                   |                   |        
|Total               | $171,556          | $2,256            | $13,021
|                    |                   |                   |        

Interest
rate swap agreements, foreign exchange forward contracts and options are presented in the
Banks balance sheet under the line items entitled derivative financial
instruments-assets and derivative financial instruments-liabilities.

All
derivative contracts will mature during 2004. Interest rate swaps maturing on March 29,
2004, match the maturity date of the related medium-term borrowings (hedged item).

Fair Value Disclosure
of Financial Instruments

For
information regarding fair value disclosure of financial instruments, see Note 21 to the
Consolidated Financial Statements.

Information about
Derivative Financial Instruments

The
table below lists for each of the years 2003 to 2008 the notional amounts and weighted
interest rates, as of December 31, 2003, for the Banks investments, borrowings and
placements, cross currency swaps and interest rate swaps.

|                          | Maturities    
|------------------------- | --------------
|
|                          | (in thousands)
|Investments               |               
|Fixed Rate               
|US Dollars                | 4,126         
|                          | 10.00%        
|Borrowings and Placements
|Fixed Rate               
|US Dollars                | 697,214       
|                          | 1.53%         
|JPY                       | 2,000,000     
|                          | 4.20%         
|Variable Rate            
|US Dollars                | 298,908       
|                          | 1.83%         



| | 98 | 
| | -- | 



---

|                            | Maturities    
|--------------------------- | --------------
|
|                            | (in thousands)
|Cross Currency Swaps       
|Pay JPY variable/           | 11,359,800    
|Receive US Dollars variable | 93,955        
|JPY
      variable rate     | 2.09%         
|US
      variable rate      | 3.34%         
|Pay US Dollars variable/    | 17,600        
|Receive JPY fixed           | 2,000,000     
|US
      variable rate      | 2.91%         
|JPY
      fixed rate        | 4.20%         
|Interest Rate Swaps        
|US Dollars                 
|Variable to fixed           | 60,000        
|Average pay rate            | 4.37%         
|Average receive rate        | 1.76%         

Foreign
  Exchange Risk Management and Sensitivity

The
Bank accepts deposits and raises funds principally in United States dollars, and makes
loans mostly in United States dollars. At December 31, 2003, the Banks total
non-dollar financial liabilities constituted 0.9% of total liabilities and consisted
exclusively of hard currencies. The Banks total non-dollar loans and investments
constituted 2.0% of total assets and consisted mostly of Yen-denominated loans. Currency
exchange risk arises when the Bank accepts deposits or raises funds in one currency and
lends or invests the proceeds in another. Failure to adequately manage this risk could
adversely affect the Banks results of operations if the value of the currency in
which the Bank borrows declines compared to the value of the currency in which it lends or
invests. The Bank manages this risk by not holding open foreign exchange positions. The
Bank uses foreign exchange forward contracts as part of its management of currency risks.
Most of the Banks forward exchange contracts are made by the Bank as end-user to
hedge foreign exchange risks arising from the issuance of non-dollar denominated
short-term Euro commercial paper and medium and long-term Euro medium-term notes, and from
making non-dollar denominated short and medium-term loans. Whenever possible, foreign
currency-denominated assets are funded with liability instruments denominated in the same
currency. In the past, in those cases where these assets were funded in different
currencies, forward foreign currency exchange or cross-currency swap contracts were used
to fully hedge the risk resulting from this cross-currency funding. For the time being,
all assets, whether they are loans or investments and whether acquired directly or through
the secondary market, must be dollar-based with interest on a floating rate basis.
Interest rate swaps plus cross-currency swaps less set-offs, with maturities from January
13, 2004 to August 1, 2004, are matched to the maturity dates of related Euro medium-term
note issuances and to corresponding assets held to maturity as part of the Banks
credit portfolio.

The
Bank also engages in some foreign exchange trades to serve customer transaction needs, and
all positions are hedged with an offsetting contract in the same currency, though assets
must all be dollar-based and on a floating rate interest basis. The Bank manages the risks
on these buy and sell foreign currency contracts under approved limits of amounts and
terms for each counterparty, and by having adopted policies that do not allow it to
maintain open positions. Interest rate swaps are made either in a single currency or
cross-currency for a prescribed period to exchange a series of interest rate flows, either
fixed for floating rate or vice versa.

# Item
  12. Description of Securities Other than Equity Securities

Not
  required in this Annual Report.



| | 99 | 
| | -- | 



---

# PART II

# Item
  13. Defaults, Dividend Arrearages and Delinquencies

None.

# Item
  14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

# Item
  15. Controls and Procedures

Evaluation of
Disclosure Controls and Procedures

The
Banks Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Banks disclosure controls and procedures (as such term is
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the Exchange Act)) as of a date within 90 days prior to the filing
date of this Annual Report (the Evaluation Date). Based on such evaluation,
such officers have concluded that, as of the Evaluation Date, the Banks disclosure
controls and procedures are effective in alerting them on a timely basis to material
information relating to the Bank (including its consolidated subsidiaries) required to be
included in the Banks reports filed or submitted under the Exchange Act.

Changes in Internal
Controls

Since
the Evaluation Date, there have not been any significant changes in the Banks
internal controls or in other factors that could significantly affect such controls.

# Item
  16. Reserved

# Item
  16A. Audit Committee Financial Expert

The
Banks Board of Directors has determined  that the Bank has at least one audit  committee
 financial  expert serving on its Audit Committee.  The Audit Committee financial expert
is Mr. Gonzalo Menéndez Duque.

# Item
  16B. Code of Ethics

The
  Bank has adopted a code of ethics that applies to the Banks principal
  executive officer and principal financial and accounting officers. The Bank
  has included the information regarding its corporate governance practices necessary
  to comply with Section 303A of the New York Stock Exchanges Listed Company
  Manual/Corporate Governance Rules on its website (www.blx.com). This information
  includes the Banks code of ethics.

# Item
  16C. Principal Accountant Fees and Services

Audit Fees

The
aggregate fees billed for each of the fiscal years ended December 31, 2002 and 2003
for professional services rendered by KPMG Peat Marwick (KPMG) for the audit
of the Banks annual financial statements or



| | 100 | 
| | --- | 



---

services that are normally provided
by KPMG in connection with statutory and regulatory filings or engagements for those
fiscal years were $171,550 and $467,217, respectively.

Audit-Related Fees

There
were no aggregate fees billed in each of the fiscal years ended December 31, 2002 and
2003 for assurance and related services by KPMG to the Bank that are reasonably related to
the performance of the audit or review of the Banks financial statements and are not
reported under Audit Fees above (consisting of other regulatory filing fees).

Tax Fees

The
aggregate fees billed in each of the fiscal years ended December 31, 2002 and 2003
for professional services rendered by KPMG to the Bank for tax compliance, tax advice and
tax planning were $57,459 and $49,150, respectively.

All Other Fees

The
aggregate fees billed in each of the fiscal years ended December 31, 2002 and 2003
for products and services provided by KPMG to the Bank, other than the services reported
in the three preceding paragraphs were $18,990 and $37,053, respectively.

Audit Committee
Pre-Approval Policies

The
Audit Committee pre-approves all auditing and non-auditing services to be provided to the
Bank by the Banks independent auditors.

# Item
  16D. Exemptions from the Listing Standards for Audit Committees

Not
applicable

# Item
  16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable

# PART III

# Item
  17. Financial Statements

The
Bank is providing the financial statements and related information specified in Item 18.

# Item
  18. Financial Statements

See
Item 19.

# Item
  19. Financial Statements and Exhibits

|(a) |  | List
of Consolidated Financial Statements
|--- |  | -----------------------------------------



| | 101 | 
| | --- | 



---

| |                                                                           |    
| | ------------------------------------------------------------------------- | ---
| | Independent Auditors Report                                              | F-1
| |                                                                           |    
| | Consolidated Balance Sheets at December
      31, 2003 and 2002           | F-2
| |                                                                          
| | Consolidated Statements of Operations
      for each of the Years in the 
| | Three-Year
      Period Ended December 31, 2003                           | F-3
| |                                                                           |    
| | Consolidated Statements of Changes
      in Stockholders Equity for each
| | of
      the Years in the Three-Year Period Ended December 31, 2003       | F-4
| |                                                                          
| | Consolidated Statements of Comprehensive
      Income for each of the    
| | Years
      in the Three-Year Period Ended December 31, 2003              | F-5
| |                                                                          
| | Consolidated Statements of Cash
      Flows for each of the Years in the 
| | Three-Year
      Period Ended December 31, 2003                           | F-6
| |                                                                           |    
| | Notes to Consolidated Financial
      Statements                          | F-7
| |                                                                           |    

|(b) |  | List of Exhibits
|--- |  | ----------------

| | Exhibit
3.1  Amended and Restated Articles of Incorporation*
| | -------------------------------------------------------------

| | Exhibit
3.2  By-Laws*
| | ----------------------

| | Exhibit
4.1  Mandate Letter*
| | -----------------------------

| | Exhibit 11
       Certifications required by Rule 13a-14(a) under the Securities Exchange
      Act of 1934
| | ------------------------------------------------------------------------------------------------------------
| |                                                                                                             
| | Exhibit 12 
      Certifications required by Rule 13a-14(b) under the Securities Exchange
      Act of 1934

| | * |  | Filed as an
      exhibit to the Form 20-F for the fiscal year ended December 31, 2002 filed
      with the Commission on February 24, 2003.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| | 102 | 
| | --- | 



---

# SIGNATURES

The
 registrant  hereby  certifies  that it meets all of the  requirements  for  filing on
Form 20-F and that it has duly  caused and authorized the undersigned to sign this annual
report on its behalf.

BANCO LATINOAMERICANO DE
EXPORTACIONES, S.A.

/s/ Jaime Rivera Jaime Rivera

Chief Executive Officer

June 25, 2004



| | 103 | 
| | --- | 



---

BANCO
LATINOAMERICANO
DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Consolidated
Financial Statements

December 31,
  2003 and 2002

(With Independent
  Auditors Report Thereon)

---

BANCO LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

---

Table of Contents

Independent Auditors
Report

Consolidated Balance
Sheets at December 31, 2003 and 2002.

Consolidated
Statements of Operations for Each of the Years in the Three  Year Period Ended
December 31, 2003.

Consolidated
Statements of Changes in Stockholders Equity for Each of the Years in the Three
 Year Period Ended December 31, 2003.

Consolidated
Statements of Comprehensive Income (Loss) for Each of the Years in the Three  Year
Period Ended December 31, 2003.

Consolidated
Statements of Cash Flows for Each of the Years in the Three  Year Period Ended
December 31, 2003.

Notes to Consolidated
Financial Statements.

---

INDEPENDENT
AUDITORS REPORT

To the Board of Directors and StockholdersBanco Latinoamericano de Exportaciones, S. A.

We have audited the
accompanying consolidated balance sheets of Banco Latinoamericano de Exportaciones, S. A.
and subsidiaries at December 31, 2003 and 2002, and the related consolidated statements of
operations, changes in stockholders equity, comprehensive income (loss), and cash
flows for each of the years in the three-year period ended December 31, 2003. These
consolidated financial statements are the responsibility of the Banks management.
Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We conducted our
audits in accordance with generally accepted auditing standards in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about 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.

In our opinion, the
consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Banco Latinoamericano de Exportaciones,
S. A. and subsidiaries at December 31, 2003 and 2002, and the results of their operations
and their cash flows for each of the years in the three-year period ended December 31,
2003, in conformity with generally accepted accounting principles in the United States of
America.

As further disclosed
in Note 3, at December 31, 2003 the Bank has credit exposure with Argentine debtors of
approximately US$440 million, less impairment losses of investment securities and of the
specific allowance for credit losses of US$200 million, resulting in a net credit exposure
of US$240 million. In addition, the Bank has securities purchased under agreements to
resell with an Argentine counter party totaling US$132 million, which are fully
collateralized with U.S. Treasury Securities. These securities are classified as U.S.
country risk, carry no reserves and are accounted for as accruing assets. While there has
been improvement in Argentinas economic and political environment, repayments
problems of the Banks Argentine loans and securities could have a material effect on
the Banks financial condition and results of operations. The Bank assesses
continuously the risk of the Argentine portfolio, of which approximately 80% has been
restructured, and periodically reviews the adequacy of the allowances for credit losses
which involves an in depth analysis of each borrower. The Bank believes it has provided an
appropriate level of allowance for credit losses and has taken appropriate securities
impairment charges. The Bank will continue to monitor developments in Argentina closely
and intends to take appropriate additional steps as more information and clarity of the
Argentine governments actions, and their resultant impact on the Banks credit
exposure, become available.

As further
  disclosed in Note 2(n) and 13, the Bank changed its method of accounting for
  certain financial instruments with characteristics of both liabilities and equity
  effective July 1, 2003. Also, as discussed in Note 2(o), 19 and 22, the Bank
  changed its method of accounting for derivative instruments and hedging activities
  effective January 1, 2001.

/s/ KPMG

KPMG

Panama, Republic
  of Panama
  January 30, 2004



F-1




---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Consolidated
Balance Sheets

F-December 31, 2003 and
2002

---

|Assets                                                                               | Note           |     | 2003          |   | 2002          |  
|------------------------------------------------------------------------------------ | -------------- | --- | ------------- | - | ------------- | -
|                                                                                    
|Cash
      and due from banks                                                        |                | US$ | 868,018       |   | 827,563       |  
|Interest-bearing
      deposits with banks (including pledged certificate of deposit |                |    
|of
      US$2,200,000 and US$5,000,000 for 2003 and 2002, respectively)              |                |     | 253,945,857   |   | 483,436,276   |  
|Securities
      purchased under agreements to resell                                | 5              |     | 132,022,050   |   | 132,022,050   |  
|Securities
      available for sale                                                  | 6,21           |     | 48,340,618    |   | 149,158,892   |  
|Securities
      held to maturity (market value of US$29,790,000 in 2003 and         |                |    
|US$11,717,332
      in 2002)                                                         | 6,21           |     | 29,452,040    |   | 11,555,397    |  
|Loans                                                                                | 7,21           |     | 2,275,031,138 |   | 2,516,512,439 |  
|Less:                                                                                |                |    
|Allowance
      for loan losses                                                      | 8              |     | 224,347,459   |   | 429,720,362   |  
|Unearned
      income                                                                |                |     | 4,282,083     |   | 9,485,461     |  
|                                                                                     |                |     |               |  
|Loans,
      net                                                                     |                |     | 2,046,401,596 |   | 2,077,306,616 |  
|                                                                                     |                |     |               |  
|Customers
      liabilities under acceptances                                       |                |     | 29,006,054    |   | 34,840,132    |  
|Premises
      and equipment                                                         | 9              |     | 4,118,848     |   | 5,086,889     |  
|Accrued
      interest receivable                                                    |                |     | 10,930,756    |   | 15,411,853    |  
|Derivatives
      financial instruments-assets                                       | 19,21          |     | 2,256,084     |   | 6,571,056     |  
|Other
      assets                                                                   |                |     | 6,213,612     |   | 13,049,807    |  
|                                                                                     |                |     |               |  
|Total
assets                                                                         |                | US$ | 2,563,555,533 |   | 2,929,266,531 |  
|                                                                                     |                |     |               |  
|Liabilities
      and Stockholders Equity                                           |                |    
|Deposits:                                                                            |                |    
|Noninterest-bearing
      - Demand                                                   | 10,21          | US$ | 19,370,257    |   | 23,102,051    |  
|Interest-bearing
      - Time                                                        |                |     | 683,584,579   |   | 528,870,561   |  
|                                                                                     |                |     |               |  
|Total
      deposits                                                                 |                |     | 702,954,836   |   | 551,972,612   |  
|                                                                                     |                |     |               |  
|Short-term
      borrowings and placements                                           | 11,21          |     | 687,214,017   |   | 647,344,489   |  
|Medium
      and long-term borrowings and placements                                 | 12,21          |     | 485,516,431   |   | 1,285,493,265 |  
|                                                                                     |                |     |               |   |               |  
|Acceptances
      outstanding                                                        |                |     | 29,006,054    |   | 34,840,132    |  
|Accrued
      interest payable                                                       |                |     | 5,431,818     |   | 11,871,885    |  
|Derivatives
      financial instruments-liabilities                                  | 19,21          |     | 13,021,310    |   | 20,020,375    |  
|Reserve
      for losses on off-balance sheet credit risk                            | 8              |     | 33,972,581    |   | 23,369,691    |  
|Redeemable
      preferred stock (US$10 par value)                                   | 13             |     | 10,946,434    |   | 0             |  
|Other
      liabilities                                                              |                |     | 11,163,367    |   | 12,955,056    |  
|                                                                                     |                |     |               |  
|Total
      liabilities                                                              |                |     | 1,979,226,848 |   | 2,587,867,505 |  
|                                                                                     |                |     |               |  
|Redeemable
      preferred stocks (US$10 par value)                                  | 13             |     | 0             |   | 12,475,600    |  
|                                                                                     |                |    
|Stockholders
      equity:                                                          | 14,15,16,20,27 |    
|Class
      A, common stocks, no par value, assigned value of US$6.67              |                |    
|(Authorized
      40,000,000; outstanding 6,342,189 in 2003                          |                |    
|and
      4,911,185 in 2002)                                                         |                |     | 44,407,100    |   | 34,862,304    |  
|Class
      B, common stocks, no par value, assigned value of US$6.67              |                |    
|(Authorized
      40,000,000; outstanding 3,466,703 in 2003                          |                |    
|and
      3,746,721 in 2002)                                                         |                |     | 26,901,149    |   | 28,765,769    |  
|Class
      E, common stocks, no par value, assigned value of US$6.67              |                |    
|(Authorized
      100,000,000; outstanding 29,543,846 in 2003                        |                |    
|and
      8,685,287 in 2002)                                                         |                |     | 208,669,649   |   | 69,606,733    |  
|Treasury
      stocks                                                                |                |     | (85,570,028   | ) | (85,633,707   | )
|Additional
      paid-in capital in excess of assigned value                         |                |     | 133,817,342   |   | 145,490,027   |  
|Capital
      reserves                                                               |                |     | 95,210,154    |   | 95,210,154    |  
|Accumulated
      other comprehensive income (loss)                                  |                |     | 9,876,226     |   | (117,717      | )
|Retained
      earnings                                                              |                |     | 151,017,093   |   | 40,739,863    |  
|                                                                                     |                |     |               |  
|Total
      stockholders equity                                                     |                |     | 584,328,685   |   | 328,923,426   |  
|                                                                                     |                |     |               |  
|Commitments
      and contingent liabilities                                         | 18,19,21       |    
|                                                                                     |                |     |               |   |               |  
|Total
      liabilities and stockholders equity                                     |                | US$ | 2,563,555,533 |   | 2,929,266,531 |  
|                                                                                     |                |     |               |  

See accompanying
notes to consolidated financial statements.

---

F-2

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Consolidated Statements of Operations

F-For Each of the Years in the Three - Year Period Ended December 31, 2003

---

|                                                            | Note |     | 2003        |   | 2002         |   | 2001        |  
|----------------------------------------------------------- | ---- | --- | ----------- | - | ------------ | - | ----------- | -
|Interest
      income:                                      |      |     |             |   |              |   |             |  
|Deposits
      with banks                                   |      | US$ | 4,620,632   |   | 9,716,709    |   | 14,421,899  |  
|Investment
      securities:                                |      |    
|Investment
      available for sale                         |      |     | 6,515,781   |   | 6,986,015    |   | 8,499,864   |  
|Investment
      held to maturity                           |      |     | 1,275,553   |   | 10,379,207   |   | 25,121,630  |  
|Loans                                                       |      |     | 85,944,679  |   | 138,681,758  |   | 330,337,606 |  
|Other                                                       |      |     | 38,534      |   | 36,660       |   | 40,626      |  
|                                                            |      |     |             |   |              |  
|Total
      interest income                                 |      |     | 98,395,179  |   | 165,800,349  |   | 378,421,625 |  
|                                                            |      |     |             |   |              |  
|Interest
      expense:                                     |      |    
|Deposits                                                    |      |     | 7,348,428   |   | 15,283,449   |   | 74,522,455  |  
|Short-term
      borrowings and placements                  |      |     | 12,050,472  |   | 33,555,221   |   | 89,357,367  |  
|Medium
      and long-term borrowings and placements        |      |     | 24,643,673  |   | 52,182,769   |   | 96,853,307  |  
|Redeemable
      preferred stock                            | 13   |     | 365,567     |   | 0            |   | 0           |  
|                                                            |      |     |             |   |              |  
|Total
      interest expense                                |      |     | 44,408,140  |   | 101,021,439  |   | 260,733,129 |  
|                                                            |      |     |             |   |              |  
|Net
      interest income                                   |      |     | 53,987,039  |   | 64,778,910   |   | 117,688,496 |  
|                                                            |      |     |             |   |              |   |             |  
|(Reversal)
      provision for loan losses                  | 8    |     | (69,507,810 | ) | 272,586,082  |   | 77,144,445  |  
|                                                            |      |     |             |   |              |  
|Net
interest income (loss) after (reversal) provision       |      |    
|for
loan losses                                             |      |     | 123,494,849 |   | (207,807,172 | ) | 40,544,051  |  
|                                                            |      |     |             |   |              |  
|Other
      income (expense):                               |      |    
|Commission
      income, net                                |      |     | 7,445,581   |   | 8,886,260    |   | 14,741,343  |  
|Provision
      for losses on off-balance sheet credit risk | 8    |     | (10,602,890 | ) | (6,169,691   | ) | 0           |  
|Derivatives
      and hedging activities                    |      |     | (7,987,844  | ) | (340,743     | ) | 7,378,770   |  
|Impairment
      loss on securities                         | 6    |     | (953,477    | ) | (44,268,201  | ) | (40,355,555 | )
|Gain
      on early extinguishment of debt                  | 12   |     | 788,907     |   | 1,430,000    |   | 0           |  
|Gain
      on sale of securities available for sale         | 6    |     | 22,210,998  |   | 183,586      |   | 4,798,368   |  
|Gain
      (loss) on foreign currency exchange              |      |     | (381,814    | ) | 300,589      |   | (20,586     | )
|Other
      income                                          |      |     | 42,385      |   | 552,727      |   | 674,430     |  
|                                                            |      |     |             |   |              |  
|Net
      other income (expense)                            |      |     | 10,561,846  |   | (39,425,473  | ) | (12,783,230 | )
|                                                            |      |     |             |   |              |  
|Operating
      expenses:                                   |      |    
|Salaries
      and other employee expenses                  |      |     | 11,390,409  |   | 9,873,652    |   | 10,648,118  |  
|Pre-operating
      costs                                   |      |     | 0           |   | 0            |   | 2,966,955   |  
|Depreciation
      of premises and equipment                |      |     | 1,511,981   |   | 1,418,251    |   | 1,194,768   |  
|Professional
      services                                 |      |     | 3,146,994   |   | 2,395,277    |   | 2,985,926   |  
|Maintenance
      and repairs                               |      |     | 1,165,864   |   | 915,902      |   | 698,014     |  
|Other
      operating expenses                              |      |     | 5,345,635   |   | 4,655,988    |   | 5,514,642   |  
|                                                            |      |     |             |   |              |  
|Total
      operating expenses                              |      |     | 22,560,883  |   | 19,259,070   |   | 24,008,423  |  
|                                                            |      |     |             |   |              |  
|Income
      (loss) from continuing operations              |      |     | 111,495,812 |   | (266,491,715 | ) | 3,752,398   |  
|                                                            |      |    
|Discontinued
      operations:                              |      |    
|Loss
      from operations and disposal of business segment | 26   |     | 0           |   | (2,346,094   | ) | (2,388,114  | )
|                                                            |      |     |             |   |              |  
|Income
      (loss) before cumulative effect                |      |    
|of
      accounting change                                  |      |     | 111,495,812 |   | (268,837,809 | ) | 1,364,284   |  
|                                                            |      |     |             |   |              |   |             |  
|Cumulative
      effect of accounting change                | 22   |     | 0           |   | 0            |   | 1,129,413   |  
|                                                            |      |     |             |   |              |  
|Net
      income (loss)                                     |      | US$ | 111,495,812 |   | (268,837,809 | ) | 2,493,697   |  
|                                                            |      |     |             |   |              |  
|                                                            |      |    
|Basic
      earnings (loss) per share:                      | 17   |    
|Income
      (loss) from continuing operations              |      | US$ | 3.88        |   | (15.42       | ) | 0.14        |  
|Loss
      from discontinued operations                     |      |     | 0.00        |   | (0.14        | ) | (0.13       | )
|Cumulative
      effect of accounting change                |      |     | 0.00        |   | 0.00         |   | 0.06        |  
|                                                            |      |     |             |   |              |  
|Net
      income (loss) per share                           |      | US$ | 3.88        |   | (15.56       | ) | 0.07        |  
|                                                            |      |     |             |   |              |  
|Diluted
      earnings (loss) per share:                    | 17   |    
|Income
      (loss) from continuing operations              |      | US$ | 3.88        |   | (15.42       | ) | 0.14        |  
|Loss
      from discontinued operations                     |      |     | 0.00        |   | (0.14        | ) | (0.13       | )
|Cumulative
      effect of accounting change                |      |     | 0.00        |   | 0.00         |   | 0.06        |  
|                                                            |      |     |             |   |              |  
|Net
      income (loss) per share                           |      | US$ | 3.88        |   | (15.56       | ) | 0.07        |  
|                                                            |      |     |             |   |              |  

See accompanying
notes to consolidated financial statements.

---

F-3

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders Equity

F-For Each of the Years in the Three - Year Period Ended December 31, 2003

---

|                                                              |     | 2003        |   | 2002         |   | 2001         |  
|------------------------------------------------------------- | --- | ----------- | - | ------------ | - | ------------ | -
|Common
      stock:                                           |     |             |   |              |   |              |  
|Balance
      at beginning of the year                        | US$ | 133,234,806 |   | 133,217,418  |   | 132,851,168  |  
|Issuance
      of common stock                                |     | 146,740,000 |   | 15,734       |   | 26,882       |  
|Difference
      in fractional shares in conversion           |    
|of
      common stock                                         |     | 3,092       |   | 1,654        |   | 931          |  
|Stock
      option plan                                       |     | 0           |   | 0            |   | 338,437      |  
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 279,977,898 |   | 133,234,806  |   | 133,217,418  |  
|                                                              |     |             |   |              |   |             
|Treasury
      stock:                                         |    
|Balance
      at beginning of the year                        | US$ | (85,633,707 | ) | (85,633,707  | ) | (20,840,896  | )
|Issuance
      of restricted stock                            |     | 63,679      |   | 0            |   | 0            |  
|Purchase
      of Class A common stock                      |     | 0           |   | 0            |   | (9,222,576   | )
|Purchase
      of Class E common stock                      |     | 0           |   | 0            |   | (55,570,235  | )
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | (85,570,028 | ) | (85,633,707  | ) | (85,633,707  | )
|                                                              |     |             |   |              |   |             
|Additional
      paid-in capital in excess of assigned value: |    
|Balance
      at beginning of the year                        | US$ | 145,490,027 |   | 145,456,320  |   | 144,522,184  |  
|Issuance
      of common stock                                |     | 220,000     |   | 35,361       |   | 103,482      |  
|Difference
      in fractional shares in conversion           |    
|of
      common stock                                         |     | (3,092      | ) | (1,654       | ) | (784         | )
|Stock
      offering costs                                    |     | (11,920,907 | ) | 0            |   | 0            |  
|Issuance
      of restricted stock                            |     | 31,314      |   | 0            |   | 0            |  
|Stock
      option plan                                       |     | 0           |   | 0            |   | 831,438      |  
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 133,817,342 |   | 145,490,027  |   | 145,456,320  |  
|                                                              |     |             |   |              |   |             
|Capital
      reserves:                                       |    
|Balance
      at beginning of the year                        | US$ | 95,210,154  |   | 305,210,154  |   | 305,210,154  |  
|Transfer
      to retained earnings                           |     | 0           |   | (210,000,000 | ) | 0            |  
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 95,210,154  |   | 95,210,154   |   | 305,210,154  |  
|                                                              |     |             |   |              |   |             
|Accumulated
      other comprehensive income (loss):          |    
|Balance
      at beginning of the year                        | US$ | (117,717    | ) | (506,280     | ) | 0            |  
|Transition
      adjustment for the adoption of SFAS 133      |     | 0           |   | 0            |   | 421,421      |  
|Net
      change in unrealized gains (losses) on securities   |    
|available
      for sale                                      |     | 7,258,933   |   | 2,967,166    |   | (387,005     | )
|Net
      change in unrealized gains (losses) on derivatives  |     | 2,735,010   |   | (2,578,603   | ) | (540,696     | )
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 9,876,226   |   | (117,717     | ) | (506,280     | )
|                                                              |     |             |   |              |   |             
|Retained
      earnings:                                      |    
|Balance
      at beginning of the year                        | US$ | 40,739,863  |   | 100,674,373  |   | 137,462,193  |  
|Net
      income (loss)                                       |     | 111,495,812 |   | (268,837,809 | ) | 2,493,697    |  
|Cash
      dividends paid on:                                 |    
|Redeemable
      preferred stock                              |     | (852,990    | ) | (1,096,701   | ) | (5,150,693   | )
|Common
      stock                                            |     | 0           |   | 0            |   | (34,010,105  | )
|Dividends
      payable on redeemable preferred stock         |     | (365,567    | ) | 0            |   | 0            |  
|Purchase
      of redeemable preferred stock                  |     | 0           |   | 0            |   | (120,453     | )
|Earnings
      transferred from capital reserves              |     | 0           |   | 210,000,000  |   | 0            |  
|Difference
      on fractional shares in conversion           |    
|of
      common stock                                         |     | (25         | ) | 0            |   | (266         | )
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 151,017,093 |   | 40,739,863   |   | 100,674,373  |  
|                                                              |     |             |   |              |   |             
|Balance
      at beginning of the year                        | US$ | 328,923,426 |   | 598,418,278  |   | 699,204,803  |  
|Changes
      during the year, net                            |     | 255,405,259 |   | (269,494,852 | ) | (100,786,525 | )
|                                                              |     |             |   |              |   |             
|Balance
      at end of the year                              | US$ | 584,328,685 |   | 328,923,426  |   | 598,418,278  |  
|                                                              |     |             |   |              |   |             

See accompanying
notes to consolidated financial statements.

---

F-4

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

F-For Each of the Years in the Three - Year Period Ended December 31, 2003

---

|                                                            | 2003 |             | 2002 |              | 2001 |          
|----------------------------------------------------------- | ---- | ----------- | ---- | ------------ | ---- | ---------
|Net
      income (loss) before cumulative effect            |      |             |      |              |      |          
|of
      accounting change                                  | US$  | 111,495,812 |      | (268,837,809 | )    | 1,364,284
|                                                            |      |             |      |              |      |          
|Cumulative
      effect of accounting change                |      | 0           |      | 0            |      | 1,129,413
|                                                            |      |             |      |              |      |          
|Net
      income (loss)                                     |      | 111,495,812 |      | (268,837,809 | )    | 2,493,697
|                                                            |     
|Other
      comprehensive income (loss):                    |     
|                                                            |      |             |      |              |      |          
|Transition
      adjustment related to SFAS 133             |      | 0           |      | 0            |      | 421,421  
|                                                            |      |             |      |              |      |          
|Unrealized
      gains (losses) on securities:              |     
|Unrealized
      gains (losses) arising from the year       |     
|(including
      adjustments related to transfers from      |     
|securities
      held to maturity to available for sale)    |      | 7,258,933   |      | (38,916,035  | )    | (387,005 
|Less:
      Reclassification adjustment for losses          |     
|included
      in net income                                |      | 0           |      | 41,883,201   |      | 0        
|                                                            |      |             |      |              |      |          
|Net
      change in unrealized gains (losses) on securities |     
|available
      for sale                                    |      | 7,258,933   |      | 2,967,166    |      | (387,005 
|                                                            |      |             |      |              |      |          
|Unrealized
      gains (losses) on derivatives:             |     
|Unrealized
      gains (losses) arising from the year       |      | 2,735,010   |      | (2,578,603   | )    | (540,696 
|                                                            |      |             |      |              |      |          
|Other
      comprehensive income (loss)                     |      | 9,993,943   |      | 388,563      |      | (506,280 
|                                                            |      |             |      |              |      |          
|Comprehensive
      income (loss)                           | US$  | 121,489,755 |      | (268,449,246 | )    | 1,987,417
|                                                            |      |             |      |              |      |          

See accompanying
notes to consolidated financial statements.

---

F-5

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Consolidated Statements of Cash Flows

F-For Each of the Years in the Three - Year Period Ended December 31, 2003

---

|                                                                      |     | 2003         |   | 2002           |   | 2001           |  
|--------------------------------------------------------------------- | --- | ------------ | - | -------------- | - | -------------- | -
|Cash
      flows from operating activities:                           |     |              |   |                |   |                |  
|Net
      income (loss)                                               | US$ | 111,495,812  |   | (268,837,809   | ) | 2,493,697      |  
|Adjustments
      to reconcile net income (loss) to net               |    
|cash
      provided by operating activities:                          |    
|Derivatives
      and hedging activities                              |     | 1,274,094    |   | 340,743        |   | (8,508,183     | )
|Depreciation
      of premises and equipment                          |     | 1,511,981    |   | 1,434,217      |   | 1,194,768      |  
|(Reversal)
      provision for loan losses                            |     | (69,507,810  | ) | 272,586,082    |   | 77,144,445     |  
|Impairment
      loss on securities                                   |     | 953,477      |   | 44,268,201     |   | 40,355,555     |  
|Provision
      for losses on off-balance sheet credit risk           |     | 10,602,890   |   | 6,169,691      |   | 0              |  
|Provision
      for fair value of guarantees                          |     | 5,260        |   | 0              |   | 0              |  
|Gain
      on sale of securities available for sale                   |     | (22,210,998  | ) | (183,586       | ) | (4,798,368     | )
|Issuance
      of restricted stock                                    |     | 94,993       |   | 0              |   | 0              |  
|Net
      decrease in accrued interest receivable                     |     | 4,481,097    |   | 58,988,253     |   | 27,751,400     |  
|Net
      (increase) decrease in derivatives financial instruments    |     | (1,223,177   | ) | 38,104,883     |   | (33,894,605    | )
|Net
      decrease (increase) in other assets                         |     | 2,756,416    |   | (1,273,916     | ) | 23,355,482     |  
|Net
      decrease in accrued interest payable                        |     | (6,074,500   | ) | (28,021,652    | ) | (20,573,556    | )
|Net
      (decrease) increase in other liabilities                    |     | (1,796,950   | ) | (6,793,106     | ) | 1,359,691      |  
|                                                                      |     |              |   |                |   |               
|Net
      cash provided by operating activities                       |     | 32,362,585   |   | 116,782,001    |   | 105,880,326    |  
|                                                                      |     |              |   |                |   |               
|Cash
      flows from investing activities:                           |    
|Decrease
      (increase) in pledged certificates of deposit          |     | 2,800,000    |   | 1,000,000      |   | (2,500,000     | )
|Net
      decrease in loans                                           |     | 102,804,456  |   | 2,188,689,639  |   | 162,141,993    |  
|Net
      acquisition of premises and equipment                       |     | (543,940     | ) | (1,043,325     | ) | (2,171,091     | )
|Proceeds
      from the redemption of securities available for sale   |     | 56,815,259   |   | 4,300,000      |   | 10,000,000     |  
|Proceeds
      from the redemption of securities held to maturity     |     | 11,555,397   |   | 143,337,714    |   | 211,154,079    |  
|Proceeds
      from the sale of securities available for sale         |     | 40,675,803   |   | 63,722,089     |   | 46,798,368     |  
|Acquisition
      of securities available for sale                    |     | 0            |   | (51,128,723    | ) | (14,162,498    | )
|Acquisition
      of securities held to maturity                      |     | 0            |   | 0              |   | (222,452,112   | )
|                                                                      |     |              |   |                |   |               
|Net
      cash provided by investing activities                       |     | 214,106,975  |   | 2,348,877,394  |   | 188,808,739    |  
|                                                                      |     |              |   |                |   |               
|Cash
      flows from financing activities:                           |    
|Net
      increase (decrease) in due to depositors                    |     | 150,982,224  |   | (1,019,386,627 | ) | (172,482,507   | )
|Net
      (decrease) increase in short-term borrowings                |    
|and
      placements with original maturity of less than 90 days      |     | (25,574,014  | ) | (249,198,695   | ) | 243,434,696    |  
|Proceeds
      from short-term borrowings and placements              |    
|with
      original maturity greater than 90 days                     |     | 870,583,548  |   | 398,145,749    |   | 2,115,902,432  |  
|Repayments
      of short-term borrowings and placements              |    
|with
      original maturity greater than 90 days                     |     | (805,140,006 | ) | (1,324,926,193 | ) | (2,045,893,707 | )
|Proceeds
      from medium and long-term borrowings and               |    
|placements
      with original maturity greater than 90 days          |     | 100,098,511  |   | 225,386,872    |   | 433,828,316    |  
|Repayments
      of medium and long-term borrowings and               |    
|placements
      with original maturity greater than 90 days          |     | (900,075,345 | ) | (727,054,926   | ) | (229,146,483   | )
|Dividends
      paid                                                  |     | (852,990     | ) | (1,096,701     | ) | (39,160,798    | )
|Proceeds
      from issuance of common stock                          |     | 146,960,000  |   | 51,095         |   | 1,300,386      |  
|Stock
      offering costs                                            |     | (7,841,128   | ) | (4,079,779     | ) | 0              |  
|Redemption
      of redeemable preferred stock                        |     | (2,260,299   | ) | (2,756,360     | ) | (699,139       | )
|Repurchase
      of common stock                                      |     | (25          | ) | 0              |   | (64,792,811    | )
|                                                                      |     |              |   |                |   |               
|Net
      cash (used in) provided by financing activities             |     | (473,119,524 | ) | (2,704,915,565 | ) | 242,290,385    |  
|                                                                      |     |              |   |                |   |               
|Net
      (decrease) increase in cash and cash equivalents            |     | (226,649,964 | ) | (239,256,170   | ) | 536,979,450    |  
|Cash
      and cash equivalents at beginning of the year              |     | 611,285,889  |   | 850,542,059    |   | 313,562,609    |  
|                                                                      |     |              |   |                |   |               
|Cash
      and cash equivalents at end of the year                    | US$ | 384,635,925  |   | 611,285,889    |   | 850,542,059    |  
|                                                                      |     |              |   |                |   |               
|Supplemental
      disclosures of cash flow information:              |    
|Cash
      paid during the year for interest                          | US$ | 50,482,640   |   | 127,166,695    |   | 280,256,305    |  
|                                                                      |     |              |   |                |   |               
|Non-cash
      investing and financing activities:                    |    
|Loan
      restructured as investment                                 | US$ | 933,374      |   | 3,023,100      |   | 31,000,000     |  
|                                                                      |     |              |   |                |   |               
|Investment
      restructured as loan                                 | US$ | 3,325,000    |   | 5,500,000      |   | 0              |  
|                                                                      |     |              |   |                |   |               
|Transfer
      from securities held to maturity to available for sale | US$ | 0            |   | 173,974,293    |   | 80,750,000     |  
|                                                                      |     |              |   |                |   |               
|Transfer
      from securities available for sale to held to maturity | US$ | 29,821,038   |   | 0              |   | 0              |  
|                                                                      |     |              |   |                |   |               
|Transfer
      from capital reserves to retained earnings             | US$ | 0            |   | 210,000,000    |   | 0              |  
|                                                                      |     |              |   |                |   |               

See accompanying
notes to consolidated financial statements.

---

F-6

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

F-December 31, 2003 and
2002

---

|(1) | Organization
|--- | ------------

| | Banco
Latinoamericano de Exportaciones, S. A. (BLADEX Panama and, together with its subsidiaries
BLADEX or the Bank), headquartered in Panama City, Republic of
Panama, is a specialized multinational bank established to finance trade in Latin America
and the Caribbean (the Region). The Bank was established pursuant to a May
1975 proposal of the XX Assembly of Governors of Central Banks in the Region, which
recommended the creation of a multinational organization to increase the foreign trade
financing capacity of the Region. BLADEX Panama was incorporated under the laws of the
Republic of Panama (Panama) on November 30, 1977 and continues to exist there
under. BLADEX Panama began business operations on January 2, 1979.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | BLADEX
Panamas subsidiaries are Banco Latinoamericano de Exportaciones Limited,
(BLADEX Cayman), BLADEX Representacao Ltda. and BLADEX Holdings Inc. BLADEX
Cayman, which is a wholly owned subsidiary, was incorporated under the laws of the Cayman
Islands (B.W.I.) on September 8, 1987 and continues to exist there under. BLADEX
Representacao Ltda., which was incorporated under the laws of Brazil on January 7, 2000
and continues to exist there under, was established to act as the Banks
representative office in Brazil. BLADEX Representacao Ltda. is 99.999% owned by BLADEX
Panama and 0.001% owned by BLADEX Cayman. BLADEX Holdings Inc., which is a wholly owned
subsidiary, was incorporated under the laws of the State of Delaware on May 30, 2000 and
continues to exist there under. BLADEX Holdings Inc.s wholly owned subsidiary,
BLADEX Financial Services, LLC, incorporated under the laws of the State of New York on
October 20, 2000 was closed on June 30, 2002 together with its wholly owned subsidiary,
BLADEX Securities, LLC, incorporated under the laws of the State of New York on October
20, 2000. BLADEX Financial Services, LLC and its wholly owned subsidiary BLADEX
Securities, LLC, had no operations subsequent to June 30, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Bank established an agency in the State of New York (the New York Agency),
which began business on March 27, 1989. The New York Agency, which continues to exist in
the State of New York, is principally engaged in obtaining inter-bank deposits and
short-term borrowings to finance the Banks short-term investments and foreign trade
loans. Since September 30, 2002 the New York Agency is located at 708 Third Avenue,
16th Floor, New York, NY 10017. The Bank also has representative offices in
Buenos Aires, Argentina and in Mexico City, Mexico.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
consolidated  financial statements have been prepared under generally accepted accounting
principles in the United States of  America (U.S. GAAP).  All amounts
presented in the consolidated financial statements and notes are expressed in U.S.
dollars.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-7

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(2) | Summary
of Significant Accounting Policies
|--- | ------------------------------------------

| | (a) | Principle
of Consolidation
| | --- | --------------------------

| | The
consolidated financial statements include the accounts of BLADEX Panama, its New York
Agency and its subsidiaries, BLADEX Cayman, BLADEX Holdings Inc. in the United States of
America and BLADEX Representacao Ltda., in Brazil. All significant inter-company balances
and transactions have been eliminated for consolidation purposes.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Use
of Estimates
| | --- | ----------------

| | The
preparation of the consolidated financial statements in conformity with U.S. GAAP
requires  the Bank to make estimates and assumptions that affect the reported amounts of
assets and  liabilities and disclosure of contingent liabilities at the date of the
consolidated  financial statements and the reported amounts of revenues and expenses
during the  reporting period. Actual results could differ from those estimates. Material
estimates  that are particularly susceptible to significant change relate to the
determination of the  allowances for credit losses and impairment losses on securities
and off-balance sheet  credit losses.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Cash
Equivalents
| | --- | ----------------

| | For
purposes of the consolidated statements of cash flows, cash equivalents consist of due
from banks, interest-bearing deposits with banks, repurchase and resale agreements with
original maturities of three months or less, except certificates of deposit and  bankers
acceptances pledged.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Repurchase
and Resale Agreements
| | --- | --------------------------------

| | Repurchase
and resale agreements are treated as collateralized financing transactions and are
carried  at the amounts at which the securities will be subsequently reacquired or
resold,  including accrued interest, as specified in the respective agreements. The Banks
policy is to take possession of securities purchased under agreements to resell and to
relinquish possession of the securities sold under agreements to repurchase. The market
value of securities to be repurchased and resold is monitored, and additional collateral
is obtained where appropriate, to protect against credit exposure.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | Investment
Securities
| | --- | ---------------------

| | Securities
are classified at the date of purchase based on the ability and intent to sell or hold
them as investments. These securities consist of debt securities such as negotiable
commercial paper, bankers acceptances, bonds and floating rate notes, and equity
securities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1) | Securities
Available for Sale
| | -- | -----------------------------

| | Securities
classified as available for sale are carried at fair value, based on quoted market
prices,  and interest earned is recognized as income. Changes in fair values are recorded
as a  component of other comprehensive income (loss) in shareholders equity until
realized.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Realized
gains and losses on sales of securities are computed on a specific identified cost basis,
and are reported within other income (expense) in the consolidated statements of
operation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-8

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | 2) | Securities
Held to Maturity
| | -- | ---------------------------

| | Securities
classified as held to maturity are securities that the Bank has the positive intent and
ability to hold to maturity. These securities are carried at amortized cost.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Any
security that experiences a decline in value, which is deemed other than temporary, is
written down to its estimated fair value through a charge to current period income, as
impairment loss on securities. Premiums and discounts are amortized or accreted over the
life of the related security as an adjustment to yield using a method that approximates
the interest method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accrual
of income is suspended on fixed maturity securities that are in default, or on which it
is  likely that future interest payments will not be collected as scheduled.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | Investment
Fund
| | --- | ---------------

| | Investment
fund is reported at cost and is included in other assets.
| | --------------------------------------------------------------------

| | (g) | Loans
| | --- | -----

| | Loans
are reported at their principal amounts outstanding net of unearned income, reduced by
the  allowance for loan losses. Unearned income is generally accreted to interest income
using  the effective yield method. Interest on loans is recognized to income on accrual
basis.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Loans
are identified as impaired and placed on non-accrual status (cash basis) when any payment
of principal or interest is over 90 days due, or if the Banks management determines
that the ultimate collection of principal or interest is doubtful. Any interest
receivable  that was accrued during the current period is reversed and any interest
accrued in prior  periods is charged-off against earnings. Interest on non-accrual loans
is only recorded as  earned when collected. Non-accrual loans are returned to an accrual
status when both  principal and interest are current and the loan is determined to be
performing in  accordance with the applicable contractual loan terms for a sustained
period of time not  less than six months, which is the minimum required by the
Superintendence of Banks of  Panama, and if in managements opinion the loan is
fully collectible. When current  events or available information confirms that specific
impaired loans or portions thereof  are uncollectible, these credit losses are deducted
from the allowance for loan losses.  Factors considered by management in determining
impairment include collection status,  collateral value, the probability of collecting
scheduled principal and interest payment  when due, and the economy in the borrowing
country. Impairment is measured on a  loan-by-loan basis, by either the present value of
expected future cash flows discounted  at the loans effective interest rate, the
loans obtainable active market  price, or the fair value of the collateral if the
loan is collateral dependent.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
loan is classified as a troubled debt restructuring if a significant concession is
granted  to the borrower due to the deterioration in the borrowers financial
condition.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-9

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | Transfers
of financial assets, primarily loans, are accounted for as sales when control over the
assets has been surrendered. Control over transferred assets is deemed to be surrendered
when: (1) the assets have been isolated from the Bank; (2) the transferee obtains the
right (free of conditions that constrain it from taking advantage of that right) to
pledge  or exchange the transferred assets; and (3) the Bank does not maintain effective
control  over the transferred assets through an agreement to repurchase them before their
maturity.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Upon
completion of a transfer of assets that satisfies the conditions described above to be
accounted for as a sale, the Bank derecognizes all assets sold; and recognizes in
earnings  any gain or loss on the sale.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h) | Allowance
for Credit Losses
| | --- | ---------------------------

| | The
allowance for credit losses is provided for risk on losses, derived from the credit
extension process, inherent in various on and off-balance sheet financial instruments,
using the reserve method of providing for credit losses. Additions to the allowance for
credit losses are made by charges to earnings. Credit losses are deducted from the
allowance, and subsequent recoveries are added. The allowance is also decreased by
reversals of the allowance back to earnings. The allowance for credit losses is based on
the evaluation of risks in the credit portfolio, and additionally, the Banks
management takes into consideration the growth, nature and composition of the credit
portfolio, including concentration, prior credit loan losses experience, and the
conditions and general tendencies of the economy in each borrowers country.
Securities received in exchange for loan claims in debt restructurings are initially
recorded at fair value, with any gain or loss reflected as recovery to the allowance, and
are subsequently accounted for as securities available for sale.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Banks management estimates of losses on impaired loans considers all available
evidence including, as appropriate, the present value of expected future cash flows
discounted at the loans contractual effective rate, the secondary market value of
the loan, the fair value of the collateral, and other factors.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Banks management estimates probable credit losses on the balance of its credit
portfolio using a provision matrix model, which classifies and aggregates risk into three
categories: country risk, borrower risk and transaction type risk. To determine the
probability of loss due to country risk, the Bank uses sovereign ratings of well-known
independent rating agencies. For borrower risk, the Bank uses the probability of default
matrix of a well-known rating agency. The Bank evaluates the transaction risk mainly by
taking into account whether the risk is a trade transaction or otherwise. This model is a
tool to estimate and validate the levels of required reserves, but does not take into
account all variables affecting asset quality. Therefore, on a quarterly basis, the Bank
also reviews the adequacy of reserves taking into account regional political, financial
and economic trends affecting the portfolio, delinquency trends, volatility and
significant concentrations that are not fully reflected in the model, and then adjust the
level of required reserves accordingly.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-10

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
allowance attributable to off-balance sheet credit risk, such as letters of credit and
guarantees, is reported as liabilities.
| | ----------------------------------------------------------------------------------------------------------------------------------

| | (i) | Fair
Value of Guarantees Including Indirect Indebtedness of Others
| | --- | ------------------------------------------------------------------

| | In
November 2002, the FASB issued FASB Interpretation No.45 (FIN 45),  Guarantors
Accounting and Disclosure Requirements of Guarantees, Including  Indirect Guarantees of
Indebtedness of Others. FIN 45 identifies characteristics of  certain guarantee
contracts and requires that a liability be recognized at fair value at  the inception of
such guarantees for the obligations undertaken by the guarantor.  Additional disclosures
also are prescribed for certain guarantee contracts. The initial  recognition and initial
measurement provisions of FIN 45 are effective for these  guarantees issued or modified
after December 31, 2002. The disclosure requirements of FIN  45 were effective for the
Bank for year ending December 31, 2002.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j) | Commission
Income
| | --- | -----------------

| | Loan
origination fees, net of direct loan origination costs are deferred and the net amount is
recognized over the contract life of the loans as an adjustment to the yield. During
periods in which interest income on loans is suspended because of concerns about the
realization of loan principal or interest, these fees, net of direct loan origination
costs are not recognized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fees
received in connection with a modification of terms of troubled debt restructuring are
applied as a reduction of the recorded investment in the loan. All related costs,
including direct loan origination costs, are charged to expense as incurred.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fees
earned on commercial and stand-by letters of credit, guarantees and commitments are
amortized until expired.
| | -----------------------------------------------------------------------------------------------------------------

| | (k) | Premises
and Equipment
| | --- | ----------------------

| | Premises
and  equipment are carried at cost less accumulated depreciation, except land, which is
carried  at cost. Depreciation is charged to operations using the straight-line method,
and is  provided over the estimated original useful life of the related assets. The
estimated  original useful life is 40 years for building and 3 to 5 years for furniture
and  equipment.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l) | Capital
Reserves
| | --- | ----------------

| | According
to Panamanian banking regulations, capital reserves are established by the Bank as a
carve-out of retained earnings and are as such a form of retained earnings. Reductions of
these capital reserves require the approval of the Banks Board of Directors, and of
Panamanian banking authorities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-11

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | (m) | Cash
and Stock Based Compensation Plan
| | --- | --------------------------------------

| | In
accordance with SFAS 148 Accounting for Stock-Based Compensation Transition
and Disclosure, an amendment of SFAS 123, as of the date of the financial statements, the
Bank has continued applying the intrinsic value based method to account for stock-based
employee compensation plans prescribed by APB Opinion No. 25, Accounting for Stock
Issued to Employees. Under the intrinsic value based method, compensation cost is
the excess, if any, of the quoted market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock. Since the
purchase price at grant date is equal to the market price, no compensation cost is
recognized.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Had
the Bank applied SFAS 123 in accounting for the Banks Stock Option Plans, net
income  and net income per share would have been the pro forma amounts indicated below:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                        |  | December 31, | 
|----------------------------------------------------------------------------------------------------------------------- |  | ------------ | 
|                                                                                                                        |  |              | 
|(In US$ thousands, except per share data)                                                                               |  | 2003         | 
|                                                                                                                       
|Net income (loss), as reported                                                                                          |  | US$          | 
|Adjust: Total stock-based employee compensation
    expense determined under fair value based method    for all grants. |  | US$          | 
|                                                                                                                        |  |              | 
|Pro forma net income (loss)                                                                                             |  | US$          | 
|                                                                                                                        |  |              | 
|Earnings (loss) per share:                                                                                              | 
|Basic-as reported                                                                                                       |  | US$          | 
|Basic-pro forma                                                                                                         |  | US$          | 
|                                                                                                                       
|Diluted-as reported                                                                                                     |  | US$          | 
|Diluted-pro forma                                                                                                       |  | US$          | 

| | (n) | Redeemable
Preferred Stock
| | --- | --------------------------

| | As
of July 1, 2003, the Bank adopted the Statement of Financial Accounting Standard No.150
(SFAS 150) Accounting for Certain Financial Instruments with Characteristics of
Both  Liabilities and Equity. This statement establishes standards for how an
issuer  classifies and measures certain financial instruments with characteristics of
both  liabilities and equity. It requires that an issuer classify a financial instrument
that is  within its scope as a liability, because that financial instrument embodies an
obligation  of the issuer.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
150 became effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. Adoption of SFAS 150 brought about the reclassification of
redeemable  preferred stock as liabilities in the consolidated balance sheets. As of July
1, 2003, the  dividend payable to redeemable preferred stock was charged to interest
expense. SFAS 150  does not require restatement of previous years.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-12

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | (o) | Derivative
Financial Instruments
| | --- | --------------------------------

| | The
Bank makes use of derivative financial instruments, primarily foreign exchange forward
contracts and interest rate swaps, as part of its management of foreign exchange and
interest rate risks.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Foreign
exchange forward contracts are commitments to purchase non-US dollar currencies at a
specified price on an agreed-upon future date, and are used mainly to hedge non-US dollar
interest paying liabilities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest
rate swaps are contracts that represent an exchange of interest payment streams based on
an agreed-upon notional principal amount, with one stream based on a specified floating
rate or fixed rate. The underlying principal balances are not affected. Net settlement
amounts are reported as adjustments to interest.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
on January 1, 2001, the Bank adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as
amended by SFAS 137 and SFAS 138. SFAS 133 standardizes the accounting for
derivative  instruments, including certain derivative instruments embedded in other
contracts. Under  SFAS 133, entities are required to carry all derivatives in the balance
sheets at fair  value. The accounting for changes in fair value (i.e. gains or losses) of
a derivative  depends on whether it has been designated and qualifies as part of a
hedging relationship  and, if so, the type of hedge. That is, the derivative is
designated by the Bank as (1) a  hedge of the fair value of a recognized asset or
liability or of an unrecognized firm  commitment (fair value hedge); or (2) a
hedge of the variability of cash flows  of a forecasted transaction to be received or
paid related to a recognized asset or  liability (cash flow hedge); or (3) as
a trading position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in the fair value of a derivative that has been designated and qualifies as a fair value
hedge, along with the changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk, are included in other income (expense) and recorded as
derivative and hedging activities. Changes in the fair value of a derivative that has
been  designated and qualifies as a cash flow hedge are recorded in other comprehensive
income  (loss) to the extent of its effectiveness, until earnings are impacted by the
variability  of cash flows from the hedged item. Changes in the fair value of derivatives
held for  trading purposes or those that do not qualify as hedges (freestanding) are
included in  other income (expense) and recorded as derivative and hedging activities.
Ineffectiveness  relating to fair value and cash flow hedges, if any, is recorded within
interest expense.  The impact of hedge ineffectiveness on the Banks consolidated
statement of  operations was not material for all periods presented.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
the inception of each hedge, the Bank documents the relationship between hedging
instruments and hedged items, as well as its risk management objective and strategy for
undertaking the hedge transactions. This process includes linking all derivatives that
are  designated as fair value or cash flow hedges to specific assets and liabilities on
the  consolidated balance sheets, or to specific firm commitments or forecasted
transactions.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-13

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | Hedge
discontinuation
| | ---------------------

| | On
an on-going basis the Bank formally assesses whether the derivatives used in hedging
transactions will continue to be highly effective in offsetting changes in
fair values or cash flows of hedged items. If it is determined that a derivative is not
highly effective as a hedge, or that it has ceased to be a highly
effective hedge, the Bank discontinues hedge accounting prospectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Bank discontinues hedge accounting prospectively when (1) the derivative is no longer
effective in offsetting changes in the fair value or cash flows of a hedged item; (2) the
derivative expires or is sold, terminated, or exercised; (3) it is unlikely that a
forecasted transaction will occur; (4) the hedged firm commitment no longer meets the
definition of a firm commitment; or (5) the designation of the derivative as a hedging
instrument is no longer appropriate.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | When
hedge accounting is discontinued because it is determined that the derivative no longer
qualifies as an effective fair value or cash flow hedge, the derivative will continue to
be carried on the consolidated balance sheets at its fair value, with changes in fair
value reported in current period earnings. The hedged item will no longer be adjusted for
changes in fair value. If the hedged item was a firm commitment or a forecasted
transaction that is not expected to occur, any amounts recorded on the consolidated
balance sheets related to the hedged item, including any amounts recorded in accumulated
other comprehensive income (loss) are reversed to current period earnings. In all other
situations, the accumulated fair value adjustment recorded on the consolidated balance
sheets for the hedged asset or liability (including amounts recorded in other
comprehensive income (loss)) will be accreted/amortized to earnings over the remaining
term of the hedged asset or liability.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (p) | Foreign
Currency Transactions
| | --- | -----------------------------

| | Assets
and liabilities denominated in foreign currencies are remeasured into U.S. dollar
equivalents using period-end spot foreign exchange rates. The effects of remeasuring
assets and liabilities into the U.S. dollar as the functional currency are included in
other income (expense) and recorded as gains (loss) on foreign currency exchange.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (q) | Pre-operating
Expenses
| | --- | ----------------------

| | Costs
of start-up activities and organization costs, related to new business initiatives, have
been expensed as incurred, in accordance with SOP 98-5, Reporting on the Costs of
Start-Up Activities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (r) | Income
Taxes
| | --- | ------------

| | BLADEX
Panama and BLADEX Cayman are exempt from the payment of income taxes. BLADEX
Representacao  Ltda., in Brazil, is subject to income taxes. The New York Agency and
BLADEX subsidiaries  incorporated in the United States of America are subject to United
States of America  federal and local taxation based on the portion of income that is
effectively connected  with its operations in that country. Such amounts have been
immaterial to date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-14

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | (s) | Discontinued
Operations
| | --- | -----------------------

| | On
January 1, 2002, the Bank adopted SFAS 144 Accounting for the Impairment or
Disposal  of Long-Lived Assets (SFAS 144). Among other matters, SFAS 144
establishes  additional criteria as compared to existing generally accepted accounting
principles to  determine when a long-lived asset is held for sale. It also broadens the
definition of  discontinued operations, but does not allow for the accrual of
future  operating losses, as was previously permitted. The Banks management has
determined  that the closure of BLADEX Financial Services, LLC and its wholly owned
subsidiary BLADEX  Securities, LLC in 2002 qualifies for discontinued operations
presentation and,  accordingly, a loss from the operations and closure of this business
segment is presented  as discontinued operations in the consolidated statements of
operations for the years  ended December 31, 2002 and 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (t) | Earnings
Per Share
| | --- | ------------------

| | Earnings
per  share ratio (EPS) is computed by dividing income available to common
stockholders (the numerator) by the average number of common shares outstanding (the
denominator) during the year.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Diluted
EPS measures performance incorporating the effect that potential common shares, such as
stock options outstanding during the same period, would have on EPS. The computation is
similar to the computation of EPS, except that the denominator is increased to include
the  number of additional common shares using the treasury stock method that would have
been  outstanding if the diluted potential common shares had been issued.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (u) | Reclassifications
| | --- | -----------------

| | Certain
amounts reported in previous years have been reclassified to conform to the 2003
presentation.
| | ------------------------------------------------------------------------------------------------------

|(3) | Exposure
in Argentina
|--- | ---------------------

| | As
of December 31, 2003 and 2002, the Banks exposure in Argentina was the following:
| | -------------------------------------------------------------------------------------

|                                           | December
      31, 2003 | 
|------------------------------------------ | ----------------------- | 
|                                           |                         | 
|(In
      US$ million)                     | Loans                   | 
|                                          
|Nominal value                              | US$                     | 
|Specific
      allowance for credit losses |                         | 
|Impairment
      losses                    |                         | 
|Collateral
      (U.S. Treasury Strips)    |                         | 
|                                           |                         | 
|Net
      exposure                         | US$                     | 
|                                           |                         | 

---

F-15

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|                                           | December
      31, 2002 | 
|------------------------------------------ | ----------------------- | 
|                                           |                         | 
|(In
      US$ million)                     | Loans                   | 
|                                          
|Nominal value                              | US$                     | 
|Specific
      allowance for credit losses |                         | 
|Impairment
      losses                    |                         | 
|Collateral
      (U.S. Treasury Strips)    |                         | 
|                                           |                         | 
|Net
      exposure                         | US$                     | 
|                                           |                         | 

| | At
December 31, 2003, the Banks net exposure in Argentina of US$240 million  represented
41% of the total equity capital of the  Bank, compared to 120% at December 31, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2003, the Banks gross  Argentine  portfolio of US$440 million,  represented
a reduction of US$407  million,  or  48%,  compared to December 31, 2002. This reduction
was mainly due to the sale of Argentine  credit  portfolio with a face value  of US$308
million.  In all cases,  the sale proceeds from the loans and  investments  exceeded
their  carrying  value,  net of  previously  established loan loss allowances and
impairment losses.  Therefore,  the credit portfolio sales generated  reversals  of the
allowance  for loan losses and gain on sales of  securities  available  for sale.  The
following  table shows  detailed  information on the sale of the Argentine credit
portfolio:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(In US$ million)           |  | Loans |  | InvestmentSecurities |   | Total |  
|-------------------------- |  | ----- |  | -------------------- | - | ----- | -
|                          
|Principal (nominal value)  |  | US$   |  | 214.5                |   | 93.5  |  
|Specific credit allowances |  |       |  | (171.4               | ) | n/a   |  
|Impairment losses          |  |       |  | n/a                  |   | (75.0 | )
|                           |  |       |  |                      |   |       |  
|Net carrying value (A)     |  | US$   |  | 43.1                 |   | 18.5  |  
|                           |  |       |  |                      |   |       |  
|Proceeds from sales (B)    |  | US$   |  | 105.7                |   | 40.7  |  
|                           |  |       |  |                      |   |       |  
|Gain on sale (B-A)         |  | US$   |  | 62.6                 |   | 22.2  |  
|                           |  |       |  |                      |   |       |  

| | All
of the Banks exposure in Argentina is denominated in U.S. dollars. The Argentine
portfolio distribution by type of industry as of December 31, 2003 is as follows:
Corporations (35%) and financial institutions (65% of which, 50% represent state owned
banks and 15% represent controlled subsidiaries of major U.S. and European banks).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Additionally,
as of December 31, 2003, the Bank had reverse repurchase agreements with Argentine counter
parties totaling US$132 million, which are fully collateralized with U.S. Treasury
securities, an amount unchanged from December 31, 2002. These instruments are classified
as U.S. country risk, carry no reserves and are accounted for as accruing assets.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
accordance with the Banks policy, all interest income on Argentine credits are
recorded on a cash basis. Although significant amounts of interest have been received on
a  consistent
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-16

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | basis
from most of the Banks clients in the country, the ultimate  collection of
principal on these loans is evaluated separately. During 2003, the Bank  collected
interest from Argentine borrowers of approximately US$24 million. The ratio of  interest
collected from Argentine borrowers to total interest payments due and payable  from these
borrowers during the 2003 was 86%.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2003, 80% of the Argentine portfolio had been restructured, while the
restructuring of 4% of the portfolio was under negotiation, 8% has not been restructured
and was not paying interest and 8% was performing under original terms.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 2004, the Bank had collected loans classified as performing under original
terms for US$7.2, million, and had restructured a loan classified as under
negotiation for US$2.5 million. These collection and debt restructuring represent
19% and 14%, respectively, of the total outstanding categories mentioned above at December
31, 2003.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Exposure
in Brazil
|--- | ------------------

| | As
of December 31, 2003 and 2002, the Banks exposure in Brazil was as follows:
| | -------------------------------------------------------------------------------

|                            |  | December 31, 2003 | 
|--------------------------- |  | ----------------- | 
|                            |  |                   | 
|(In US$ million)            |  | Loans             | 
|                           
|Nominal value               |  | US$               | 
|Allowance for credit losses |  |                   | 
|Fair value adjustments      |  |                   | 
|                            |  |                   | 
|Net exposure                |  | US$               | 
|                            |  |                   | 

|                            |  | December 31, 2002 | 
|--------------------------- |  | ----------------- | 
|                            |  |                   | 
|(In US$ million)            |  | Loans             | 
|                           
|Nominal value               |  | US$               | 
|Allowance for credit losses |  |                   | 
|Fair value adjustments      |  |                   | 
|                            |  |                   | 
|Net exposure                |  | US$               | 
|                            |  |                   | 

| | At
December 31, 2003, the Banks Brazilian credit portfolio is composed by financial
institutions (78%) and non-financial entities (22%).
| | -----------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2003 the Banks Brazilian portfolio had one impaired and restructured
loan on a non-accruing basis for US$47 million to a Brazilian corporation, for which the
Bank had established a specific allowance for possible loan losses of US$16 million. On
December 29, 2003, this Brazilian corporation reached an agreement with its private
creditors to reschedule approximately US$787 million of outstanding debt over the next
five years, which is expected to resolve all outstanding defaults and accelerations with
creditors. In addition, the parent company of this Brazilian corporation has agreed on the
terms of the restructuring of its outstanding loans owed to a Brazilian state-owned bank.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-17

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(5) | Securities
Purchased under Agreements to Resell
|--- | -----------------------------------------------

| | The
Bank enters into purchases of securities under agreements to resell the same or
substantially identical securities. These agreements are considered secured loans. At
December 31, 2003 and 2002, securities purchased under agreements to resell had a carrying
value of US$132,022,050. These reverse repurchase agreements are all with an Argentine
counter party, and they are fully collateralized with U.S. Treasury securities,
consequently, the Bank classifies these instruments as U.S. country risk. At December 31,
2003, the maturity of these agreements did not exceed 90 days, and they were all current
with regard to principal and interest.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Investment
Securities
|--- | ---------------------

| | a) | Securities
Available for Sale
| | -- | -----------------------------

| | These
securities consist of mostly debt instruments that the Bank buys with the intention of
selling them prior to maturity, and are subject to the same approval criteria as the rest
of the credit portfolio.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
amortized cost, estimated fair value, and related unrealized gross gain (loss) of
securities available for sale, are as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------

|                                         |  | December
      31, 2003 | 
|---------------------------------------- |  | ----------------------- | 
|                                         |  |                         | 
|                                         |  | AmortizedCost           | 
|Bonds:                                   |  |                         | 
|Corporate                                |  | US$                     | 
|Government                               |  |                         | 
|Impaired
      bonds - Argentine issuers |  |                         | 
|                                         |  |                         | 
|                                         |  | US$                     | 
|                                         |  |                         | 

|                                         |  | December
      31, 2002 | 
|---------------------------------------- |  | ----------------------- | 
|                                         |  |                         | 
|                                         |  | AmortizedCost           | 
|Bonds:                                   | 
|Corporate                                |  | US$                     | 
|Government                               |  |                         | 
|Impaired
      bonds - Argentine issuers |  |                         | 
|                                         |  |                         | 
|                                         |  | US$                     | 
|                                         |  |                         | 

| | During
2003, investments with a fair value of US$933,374 were received in lieu of payment of an
impaired Argentine loan. In addition, the terms of an impaired Argentine security with a
fair value of US$4,269,479 were modified as a result of a restructuring agreement. At
December 31, 2003 and 2002, all Argentine securities were classified as available for
sale. During 2003 and 2002, an impaired securities with a net value of US$3,325,000 and
US$5,500,000, respectively, were restructured and converted into loans.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2003 and 2002, securities with a carrying value of US$48,340,618 and
US$129,835,647, respectively, were pledged to secure borrowings for securities sold under
repurchase agreements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-18

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
following table presents the realized components of investment securities transactions
attributable to securities available for sale:
| | -----------------------------------------------------------------------------------------------------------------------------------------

|      |  | December
      31, | 
|----- |  | ------------------ | 
|      |  |                    | 
|      |  | 2003               | 
|      |  | Gains              | 
|     
|Bonds |  | US$                | 
|      |  |                    | 

| | The
amortized cost and fair values of securities available for sale at December 31, 2003, by
contractual maturity are shown in the following table:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

|                           |  | AmortizedCost |  | FairValue  | 
|-------------------------- |  | ------------- |  | ---------- | 
|                          
|Due within 1 year          |  | US$           |  | 4,004,942  | 
|After 1 but within 5 years |  |               |  | 36,833,778 | 
|After 5 years              |  |               |  | 933,374    | 
|                           |  |               |  |            | 
|                           |  | US$           |  | 41,772,094 | 
|                           |  |               |  |            | 

| | Pursuant
to rules issued by the Superintendence of Banks of Panama that became effective on May
31,  2002, certain securities held to maturity were transferred to available for sale. At
the  date of the transfer, the investments had an amortized cost of US$173,974,293 and a
fair  value of US$131,269,757. The related unrealized loss of US$42,704,536 was recorded
in  other comprehensive income (loss) account. On June 30, 2002, the Banks
management  determined that the decline in fair value of Argentine investment securities
classified at  that time as available for sale, was other than temporary. Consequently,
an impairment  loss on securities of US$41,883,201 was recorded. During 2003, the decline
in fair value  of these investments considered other than temporary was US$953,477.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Securities
Held to Maturity
| | -- | ---------------------------

| | The
Banks treasury investment policy is to acquire securities with maturities up to
three years, as long as they have a short-term rating of A1/P1 or long-term
rating of A or better, issued by at least two of the following agencies:
Standard & Poors, Moodys Investors, or Fitch IBCA, and as long as they
are  negotiable in the secondary markets. Securities rated one level or more below
investment  grade ratings are classified as available for sale. For purposes other than
treasury  activities, the Bank has classified as held to maturity, securities that do not
adhere to  the Banks treasury investment policy, such as bonds and floating rate
notes, which  were bought as part of its credit portfolio, and are subject to the same
credit approval  criteria and policy as the rest of the credit portfolio. As of December
31, 2003 and 2002,  the outstanding balances of securities held to maturity belonging to
credit portfolio were  US$29,452,040 and US$11,555,397, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-19

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
amortized cost, estimated market value, and related estimated unrealized gross gain
(loss)  of securities held to maturity are as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------

|                 |  | December
      31, 2003 | 
|---------------- |  | ----------------------- | 
|                 |  |                         | 
|                 |  | AmortizedCost           | 
|                
|Bonds-Government |  | US$                     | 
|                 |  |                         | 

|                |  | December
      31, 2002 | 
|--------------- |  | ----------------------- | 
|                |  |                         | 
|                |  | AmortizedCost           | 
|               
|Bonds-Corporate |  | US$                     | 
|                |  |                         | 

| | During
August 2003, the Bank transferred Mexican government securities available for sale for
US$29,821,038, to held to maturity. At the date of the transfer, the estimated unrealized
gains on these securities were US$4,107,753, which are being amortized until its maturity
in January 2007. As of December 31, 2003, the balance of the estimated unrealized gross
gain, net of amortization, was US$3,691,991.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2003, the maturity of all of these securities is over one year.
| | ----------------------------------------------------------------------------------

|(7) | Loans
|--- | -----

| | The
remaining loan maturities are summarized as follows:
| | --------------------------------------------------------

|                                   | December
      31, | 
|---------------------------------- | ------------------ | 
|                                   | 2003               | 
|Current:                           |                    | 
|Up
      to 1 month                | US$                | 
|From
      1 month to 3 months     |                    | 
|From
      3 months to 6 months    |                    | 
|From
      6 months to 1 year      |                    | 
|Over
      1 year                  |                    | 
|Impaired
      - Argentina         |                    | 
|                                   |                    | 
|                                   |                    | 
|Restructured
and impaired:         |                    | 
|Argentine
      borrowers          |                    | 
|Brazilian
      borrower           |                    | 
|                                   |                    | 
|                                   |                    | 
|Past
due:                          |                    | 
|Impaired
      Argentine borrowers |                    | 
|Brazilian
      borrower           |                    | 
|                                   |                    | 
|                                   |                    | 
|                                   |                    | 
|                                   | US$                | 
|                                   |                    | 

---

F-20

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
fixed  and floating interest rates distribution of the loan portfolio is as follows:
| | ----------------------------------------------------------------------------------------

|                              | December
      31, |              
|----------------------------- | ------------------ | -------------
|                              |                    |              
|                              | 2003               |              
|                             
|Fixed interest rates          | US$                | 1,270,879,762
|Floating
      interest rates |                    | 1,004,151,376
|                              |                    |              
|                              | US$                | 2,275,031,138
|                              |                    |              

| | The
following table provides a breakdown of loans by country risk:
| | ------------------------------------------------------------------

|                          | December
      31, |              
|------------------------- | ------------------ | -------------
|                          |                    |              
|Country                   | 2003               |              
|                         
|Argentina                 | US$                | 397,889,981  
|Bolivia                   |                    | 0            
|Brazil                    |                    | 1,011,165,805
|Chile                     |                    | 131,010,000  
|Colombia                  |                    | 96,479,616   
|Costa
      Rica          |                    | 58,927,685   
|Dominican
      Republic  |                    | 24,169,884   
|Ecuador                   |                    | 21,644,929   
|El Salvador               |                    | 25,646,616   
|Guatemala                 |                    | 33,831,065   
|Jamaica                   |                    | 13,551,989   
|Mexico                    |                    | 183,051,940  
|Nicaragua                 |                    | 8,609,442    
|Panama                    |                    | 43,600,000   
|Paraguay                  |                    | 0            
|Peru                      |                    | 64,664,849   
|Trinidad
      and Tobago |                    | 99,874,837   
|Venezuela                 |                    | 60,912,500   
|                          |                    |              
|                          | US$                | 2,275,031,138
|                          |                    |              

| | In
the normal course of business, at December 31, 2003 and 2002, the Bank has transactions
with 39% and 35% of its Class A and B stockholders, respectively,
(See Note 14). All transactions are made based on arms-length terms and subject to
prevailing commercial criteria and market rates and are subject to all of the Banks
Corporate Governance and control procedures. At December 31, 2003 and 2002, approximately
51% and 26% of the outstanding loan portfolio are placed with the Bank Class A and
B stockholders and their related parties, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2003 and 2002, substantially all of the Banks Argentine loan
portfolio of US$397,889,981 and US$691,471,518, respectively, was classified as impaired.
These impaired Argentine loans were accounted using the cash basis method.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-21

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
following is a summary of information on past due loans and interest amounts on
non-accruing loans:
| | -------------------------------------------------------------------------------------------------------

|                                             |  | December
      31, | 
|-------------------------------------------- |  | ------------------ | 
|                                             |  |                    | 
|                                             |  | 2003               | 
|                                            
|Loans on non-accrual basis                   |  | US$                | 
|Past
      due loans on accrual basis (less  | 
|than
      90 days past due)                 |  |                    | 
|                                             |  |                    | 
|Total
      past due and non-accruing        | 
|loans                                        |  | US$                | 
|                                             |  |                    | 
|Interest
      which would had been recorded | 
|if
      the loans had not been on a         | 
|non-accrual
      basis                      |  | US$                | 
|Interest
      income collected on           | 
|non-accruing
      loans                     |  |                    | 
|                                             |  |                    | 
|Foregone
      interest revenue              |  | US$                | 
|                                             |  |                    | 

| | The
following is a summary of information pertaining to impaired loans:
| | -----------------------------------------------------------------------

|                                                         |  | December
      31, | 
|-------------------------------------------------------- |  | ------------------ | 
|                                                         |  |                    | 
|                                                         |  | 2003               | 
|                                                        
|Impaired loans with specific allowance for credit losses |  | US$                | 
|                                                         |  |                    | 
|Specific allowance for impaired loans (under SFAS 114)   |  | US$                | 
|                                                         |  |                    | 
|Average balance of impaired loans during the year        |  | US$                | 
|                                                         |  |                    | 
|Interest income collected on impaired loans              |  | US$                | 
|                                                         |  |                    | 

|(8) | Allowance
for Credit Losses
|--- | ---------------------------

| | The
allowance for credit losses is available to absorb future estimated probable credit losses
existing in the credit portfolio at the date of the consolidated balance sheets. The Bank
classifies the allowance for credit losses into two components:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Allowance
for Loan Losses:
| | -- | --------------------------

|                                                        |  | December
      31, | 
|------------------------------------------------------- |  | ------------------ | 
|                                                        |  |                    | 
|                                                        |  | 2003               | 
|                                                       
|Balance at beginning of the year                        |  | US$                | 
|Provision (reversal) charged to income                  |  |                    | 
|Loan recoveries                                         |  |                    | 
|Loans written off against the allowance for loan losses |  |                    | 
|                                                        |  |                    | 
|Balance at end of the year                              |  | US$                | 
|                                                        |  |                    | 

---

F-22

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | Loans
deemed uncollectible are written off against the allowance for loan losses, while
recoveries of amounts previously charged off are credited to the allowance for loan
losses.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Reserve
for Losses on Off-Balance Sheet Credit Risk:
| | -- | ----------------------------------------------------

|                                 |  | December
      31, | 
|-------------------------------- |  | ------------------ | 
|                                 |  |                    | 
|                                 |  | 2003               | 
|                                
|Balance at beginning of the year |  | US$                | 
|Provision                        |  |                    | 
|                                 |  |                    | 
|Balance at end of the year       |  | US$                | 
|                                 |  |                    | 

| | The
reserve for losses on off-balance sheet credit risk reflects the Banks management
estimate of probable losses on off-balance sheet credit risk items, such as: Confirmed
letters of credit, stand-by letters of credit and credit commitments. (See Note 18).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
increase in the allowance for losses on off-balance sheet credit risk during 2003 was
mainly related to outstanding transactions with Argentine borrowers for US$20,455,206.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Premises
and Equipment
|--- | ----------------------

| | The
table below provides information on premises and equipment:
| | ---------------------------------------------------------------

|                                    |  | December
      31 | 
|----------------------------------- |  | ----------------- | 
|                                    |  |                   | 
|                                    |  | 2003              | 
|                                   
|Land                                |  | US$               | 
|Building
      and improvements     |  |                   | 
|Furniture
      and equipment       |  |                   | 
|                                    |  |                   | 
|                                    |  |                   | 
|Less
      accumulated depreciation |  |                   | 
|                                    |  |                   | 
|                                    |  | US$               | 
|                                    |  |                   | 

|(10) | Deposits
|---- | --------

| | The
maturity  profile of the Banks deposits is as follows:
| | -----------------------------------------------------------

|                                           |  | December
      31 | 
|------------------------------------------ |  | ----------------- | 
|                                           |  |                   | 
|                                           |  | 2003              | 
|                                          
|Demand                                     |  | US$               | 
|Up
      to 1 month                        |  |                   | 
|From
      1 month to 3 months             |  |                   | 
|From
      3 months to 6 months            |  |                   | 
|From
      6 months to 1 year              |  |                   | 
|Over
      1 year                          |  |                   | 
|                                           |  |                   | 
|                                           |  | US$               | 
|                                           |  |                   | 
|                                          
|Time
      deposits of US$100,000 or more: | 
|Aggregate
      amount of deposits         |  | US$               | 
|                                           |  |                   | 

---

F-23

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|Deposits in offices outside of Panama: | 
|-------------------------------------- | 
|Aggregate amount of deposits           | 
|                                       | 
|Interest expense                       | 
|                                       | 

|(11) | Short-term
Borrowings and Placements
|---- | ------------------------------------

| | The
breakdown of short-term borrowings and placements due to banks and other investors is as
follows:
| | -----------------------------------------------------------------------------------------------------

|                                               |  | December
      31 | 
|---------------------------------------------- |  | ----------------- | 
|                                               |  |                   | 
|                                               |  | 2003              | 
|Borrowings:                                    |  |                   | 
|At fixed interest rates:                       | 
|Advances from banks                            |  | US$               | 
|Discounted acceptances                         |  |                   | 
|Securities sold under repurchase agreements    |  |                   | 
|                                               |  |                   | 
|Total short-term borrowings outstanding at the | 
|end of the year                                |  | US$               | 
|                                               |  |                   | 
|Average outstanding during the year            |  | US$               | 
|                                               |  |                   | 
|Maximum outstanding at any month-end           |  | US$               | 
|                                               |  |                   | 

|                                                            |  | December
      31 | 
|----------------------------------------------------------- |  | ----------------- | 
|                                                            |  |                   | 
|                                                            |  | 2003              | 
|At fixed
      interest rates:                              | 
|Weighted
      average interest rate at the end of the year |  |                   | 
|Weighted
      average interest rate during the year        |  |                   | 
|                                                           
|At floating
      interest rates:                           | 
|Weighted
      average interest rate at the end of the year |  |                   | 
|Weighted
      average interest rate during the year        |  |                   | 

| | The
Banks activities to secure funds include a US$750 million program for issuance of
Euro-Commercial Paper and Euro-Certificates of Deposit. This program may be used by the
Bank or its subsidiary in the Cayman Islands to issue commercial paper or certificates of
deposit with maturities between 7 and 365 days, bearing interest or at discount, for a
minimum of US$10,000 and in various currencies. The securities are generally sold in
bearer form through one or more authorized financial institutions. With respect to
issuance of certificates of deposit, these may only be issued by the Banks
subsidiary in the Cayman Islands.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-24

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(12) | Medium
and Long-term Borrowings and Placements
|---- | ----------------------------------------------

| | The
breakdown of medium and long-term borrowings and placements (original maturity of more
than one year) is as follows:
| | ------------------------------------------------------------------------------------------------------------------------

|                                                                       | December
      31 | 
|---------------------------------------------------------------------- | ----------------- | 
|                                                                       |                   | 
|                                                                       | 2003              | 
|Borrowings:                                                            |                   | 
|At floating
      interest rates:                                      |                   | 
|Syndicated
      and other medium-term borrowings from                 |                   | 
|international
      banks, with due dates from July 2004               |                   | 
|until
      September 2008                                             | US$               | 
|Securities
      sold under repurchase agreements                      |                   | 
|                                                                       |                   | 
|Total
      floating interest rate borrowings                          |                   | 
|                                                                       |                   | 
|At fixed
      interest rates:                                         |                   | 
|Syndicated
      and other medium-term borrowings from                 |                   | 
|international
      banks, with due dates from January 2004            |                   | 
|until
      December 2005                                              |                   | 
|Securities
      sold under repurchase agreements                      |                   | 
|                                                                       |                   | 
|Total
      fixed interest rates borrowings                            |                   | 
|                                                                       |                   | 
|Total
      borrowings                                                 |                   | 
|                                                                       |                   | 
|Placements:                                                            |                   | 
|At floating
      interest rates:                                      |                   | 
|Euro
      medium-term notes with due dates from May 2004              |                   | 
|until
      May 2006                                                   |                   | 
|At fixed
      interest rates:                                         |                   | 
|Euro
      medium-term notes with due dates from February              |                   | 
|2004
      until September 2005                                        |                   | 
|                                                                       |                   | 
|Total
      placements                                                 |                   | 
|                                                                       |                   | 
|                                                                      
|Total
      medium and long-term borrowings and placements outstanding | US$               | 
|                                                                       |                   | 
|Average
      outstanding during the year                              | US$               | 
|                                                                       |                   | 
|Maximum
      outstanding at any month end                             | US$               | 
|                                                                       |                   | 

|                                                      | December
      31 |      
|----------------------------------------------------- | ----------------- | -----
|                                                      |                   |      
|                                                      | 2003              |      
|At fixed interest rates:                              |                   |      
|Weighted average interest rate at the end of the year |                   | 6.24%
|Weighted average interest rate during the year        |                   | 6.27%
|                                                     
|At floating interest rates:                           |                  
|Weighted average interest rate at the end of the year |                   | 1.84%
|Weighted average interest rate during the year        |                   | 2.01%

---

F-25

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
future maturities of medium and long-term borrowings and placements are as follows:
| | ---------------------------------------------------------------------------------------

|               |  | December
      31 | 
|-------------- |  | ----------------- | 
|               |  |                   | 
|               |  | 2003              | 
|              
|2003           |  | US$               | 
|2004           |  |                   | 
|2005           |  |                   | 
|2006           |  |                   | 
|2007 and later |  |                   | 
|               |  |                   | 
|               |  | US$               | 
|               |  |                   | 

| | The
Banks funding activities include a Euro-Medium-Term Note program (EMTN
Program), which, in June of 1999, was increased to a maximum of US$2,250 million.
The program may be used to issue notes with maturities from 90 days up to a maximum of 30
years, at fixed, floating interest rates, or at discount, and in various currencies. The
notes are generally sold in bearer or registered form through one or more authorized
financial institutions.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | One
of the Banks borrowing agreement has covenants related to the following ratios:
Risk  weighted capital adequacy ratio, open credit exposure ratio, maturity gap ratio,
single  country exposure ratio, single group exposure ratio. As of December 31, 2003 the
Bank was  in compliance with these covenants.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Early
Extinguishment of Debt
| | ----------------------------

| | During
the second quarter of 2003, the Bank repurchased in the market at discount, notes issued
under its EMTN program, with a face value of US$14,098,000. The Banks total
disbursements were US$13,309,093, which resulted in a realized gain of US$788,907. The
original maturity dates of these notes were September 20, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Also,
during the third quarter of 2002, the Bank repurchased in the market at discount, notes
issued under its EMTN program with a face value of US$11,000,000. The Banks total
disbursements were US$9,570,000, resulting in a realized gain of US$1,430,000. The
original maturity dates of these notes were September 25, 2003 and May 2, 2003.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Redeemable
Preferred Stock
|---- | --------------------------

| | The
Banks authorized redeemable preferred stock consist of 5,000,000 shares of US$10
par  value per share, totaling US$50,000,000. The minimum 8% cumulative participating
preferred  stock issue was authorized on April 30, 1986. At December 31, 2003 and 2002,
the issued  and outstanding shares were 913,918 and 1,218,557, respectively. At December
31, 2003 and  2002, 107,612 and 29,003 preferred stock, respectively, were redeemed but
not delivered by  stockholders. Normally, the preferred stock is non-voting, except if
the minimum dividends  were not paid, and certain other conditions were not complied
with, in which case, the  preferred stockholders have the right to elect a Director, and
to receive a minimum  preferred dividend of 8%, which payment would be subject to the
approval of the  Banks Board of Directors and, in case of a liquidation would
receive first  preference of US$10 per
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-26

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | share,
plus accrued and unpaid dividends. The preferred stock is  required to be redeemed at
their par value by means of a sinking fund designed to retire  20% of the aggregate par
value of the preferred stock outstanding as of March 15, 2002,  and on May 15 of each of
the subsequent years up to 2006. Accordingly, on May 15, 2003,  the Bank redeemed 304,639
outstanding stock, which represented the 20% of the total  redeemable preferred stock.
The redeemed preferred stock was chosen by lot on March 31,  2003 at the Banks
headquarters in Panama.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of July 1, 2003, the Bank adopted SFAS 150, consequently redeemable preferred stock was
reclassified as a liability and the accrual of interest payable was charged to interest
expense. As of December 31, 2003, the interest payable to redeemable preferred stock was
US$731,134.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Common
Stock
|---- | ------------

| | The
Banks common stock is divided into three categories:
| | ---------------------------------------------------------

| | 1) | Class
A shares may only be issued to Latin American Central Banks or banks in
which the state or other government agencies is the majority shareholder.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2) | Class
B shares may only be issued to banks or financial institutions.
| | -- | -----------------------------------------------------------------------

| | 3) | Class
E shares may be issued to any person whether a natural person or a legal
entity.
| | -- | ----------------------------------------------------------------------------------------

| | The
holders of the Class B shares have the right to convert or exchange their
Class B shares, at any time and without restriction, for Class E
shares, at a rate of one new Class B share for one Class E share,
without a discount. Class E shares issued in exchange for existing Class
B shares which have not been outstanding for at least two years (including
newly issued Class B shares) will not (unless they are registered by the Bank
under the U.S. Securities Act of 1933, as amended) be freely tradable in the New York
Stock Exchange until the end of a two-year holding period, which will include the holding
period of the Class B shares for which the Class E shares are
exchanged.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 18, 2002, the Banks shareholders approved an amendment of the first
paragraph Article 4 of the Articles of Incorporation of the Bank which increased its
authorized common capital from 70,000,000 to 180,000,000 shares for the purpose of
allowing the Bank to raise needed additional equity capital through a rights offering to
the Banks common stockholders. (See Note 15).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-27

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | On
June 27, 2003, the Bank offered non-transferable rights, entitling the holders of common
stock to subscribe up to an aggregate of 22,000,000 shares of the Banks common
stock. Following the capitalization and the subscription of the 22 million shares offered,
BLADEXs shareholding composition was: 16.1% Class A, 10.4% Class
B and 73.5% Class E, and the total number of common stock
outstanding was 39.3 million shares. The following table provides detailed information on
the share activity per class for each of the years in the two-year period ended December
31, 2003:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       | Class
      A |            | Class
      B |            | Class
      E |             | Total |            
|-------------------------------------- | --------------- | ---------- | --------------- | ---------- | --------------- | ----------- | ----- | -----------
|                                      
|Authorized                             |                 | 40,000,000 |                 | 40,000,000 |                 | 100,000,000 |       | 180,000,000
|                                       |                 |            |                 |            |                 |             |       |            
|                                      
|Outstanding
      at December 31, 2001 |                 | 4,911,185  |                 | 4,247,213  |                 | 8,182,440   |       | 17,340,838 
|Conversions                            |                 | 0          |                 | (502,850   | )               | 502,847     |       | (3         
|Issuance
      of new stock            |                 | 0          |                 | 2,358      |                 | 0           |       | 2,358      
|                                       |                 |            |                 |            |                 |             |       |            
|Outstanding
      at December 31, 2002 |                 | 4,911,185  |                 | 3,746,721  |                 | 8,685,287   |       | 17,343,193 
|Conversions                            |                 | 0          |                 | (933,015   | )               | 933,013     |       | (2         
|Issuance
      of new stock            |                 | 1,431,004  |                 | 652,997    |                 | 19,915,999  |       | 22,000,000 
|Issuance
      of restricted stock     |                 | 0          |                 | 0          |                 | 9,547       |       | 9,547      
|                                       |                 |            |                 |            |                 |             |       |            
|Outstanding
      at December 31, 2003 |                 | 6,342,189  |                 | 3,466,703  |                 | 29,543,846  |       | 39,352,738 
|                                       |                 |            |                 |            |                 |             |       |            

| | Under
the stock repurchased program approved by the Banks Board of Directors on December
6, 2000, the Bank repurchased common stock in the open market at the prevailing market
price at the date of the purchase. The following table presents information regarding
shares repurchased not retired by the Bank and, accordingly, were classified as treasury
stock:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                | Class
      A |         | Class
      B |            | Class
      E |        
|----------------------------------------------- | --------------- | ------- | --------------- | ---------- | --------------- | -------
|                                               
|                                                | Shares          |         | Amount          |            | Shares          |        
|                                               
|Outstanding
      at December 31, 2000          |                 | 48,297  |                 | 1,485,144  |                 | 568,010
|Repurchased
      during 2001                   |                 | 269,843 |                 | 9,222,575  |                 | 0      
|                                                |                 |         |                 |            |                 |        
|Outstanding
      at December 31, 2001 and 2002 |                 | 318,140 |                 | 10,707,719 |                 | 568,010
|Issuance
      of restricted stock              |                 | 0       |                 | 0          |                 | 0      
|                                                |                 |         |                 |            |                 |        
|Outstanding
      at December 31, 2003          |                 | 318,140 |                 | 10,707,719 |                 | 568,010
|                                                |                 |         |                 |            |                 |        

|(15) | Capital
Issuance
|---- | ----------------

| | Background
information related to capital issuance
| | --------------------------------------------------

| | The
credit loss provision and securities impairment charges taken in the second quarter of
2002 resulted in diminished capital ratios. In order to bring these back to historical
levels, so as to support BLADEXs growth plans, and strengthen its ability to
withstand market volatility, the Banks Board of Directors decided to raise
additional Tier 1 capital (common stock equity) for at least US$100 million. The
Banks Board of Directors believed that the Bank had to raise a minimum of US$100
million of Tier 1 capital in order to retain its investment grade, and thus, continue to
secure the funding necessary to fulfill its role of providing trade financing to borrowers
in Latin America.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-28

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | In
order to provide assurance that the Bank would be able to raise the required equity
capital, a group of existing Class A and Class B stockholders,
and  several multilateral organizations, including the IFC (together, the Core
Support  Group), supported the Bank in the form of more than US$100 million in
commitments to  purchase any shortfall of shares which were offered to existing
shareholders in the rights  offering, but which were not subscribed by the end of the
subscription period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
the Banks Articles of Incorporation, the Class A and Class B stockholders
have preemptive rights with respect to the sale of additional Class  A and
Class B shares, respectively. The Class E shareholders do not
have preemptive rights, but the Banks Board of Directors  included the Class E shareholders
in the rights offering in order to ensure  that they were treated fairly. In order to
address a potential stockholder ownership  dilution, the Banks Board of Directors
raised the needed capital initially through a  rights offering to the Banks common
stockholders, pursuant to which each stockholder  was given the opportunity to subscribe,
on a pro rata basis for a portion of the shares  being offered. Only following the
completion of the rights offering, would the Bank sell  shares to entities that were not
stockholders. BLADEX chose to offer 22 million shares in  order to provide a cushion so
that if BLADEX share price declined substantially, it would  be still able to raise its
target of US$100 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of June 27, 2003, the Bank completed the capitalization process through a stock rights
offering raising US$147 million at US$6.68 per share. Following an over-subscription of
the issue that resulted in subscriptions for a total of 23.2 million common shares, the
entire 22 million issue of new shares was subscribed by shareholders of record at June 2,
2003. The subscription had an important and positive connotation on credit risk ratings
of  the Bank. On July 2, 2003, Standard and Poors raised its BBB- investment grade
rating outlook from a negative to stable and, on July 21, 2003, Moodys confirmed
the  stable outlook of its Baa3 investment grade rating and upgraded the Financial
Strength  Rating of the Bank. On August 5, 2003, Fitch upgraded the Banks long-term
rating  from BB+ back to an investment grade rating of BBB- with a stable outlook.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Capital
issuance related costs
| | ------------------------------

| | On
June 28, 2002, the Bank hired BNP Paribas Securities Corp. and Deutsche Bank Securities
Inc. (together the Financial Advisors) to provide financial advice with
respect to the capital raising plans and ratings-related issues. At December 31, 2003, the
accumulated direct costs related to the advisory services provided by the Financial
Advisors as well as legal and other financial advisors were US$11,920,907, which was
recorded as a deduction from additional paid-in capital.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2002, the accumulated costs related to the capital raising exercise were
US$4,079,779. Since the rights offering was not yet completed on that date, the
capitalization costs and related expenses were classified as other assets. At December 31,
2002, the Bank had a US$1,650,000 commitment to the Financial Advisors for their services
in connection with the capitalization process, which was paid during 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-29

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(16) | Cash
and Stock Based Compensation Plans
|---- | ---------------------------------------

| | The
Bank adopted a number of equity compensation plans under which it administers restricted
stock and stock options plans to attract, retain and motivate directors, officers and
employees, and to compensate them for their contributions to the growth and profits of the
Bank.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Restricted
Stock  Directors
| | -- | ----------------------------

| | During
2003, the Banks Board of Directors approved a restricted stock award program for
non-employee Directors of the Bank. Restricted stock delivered under this award program
may be sourced from treasury stock, or authorized un-issued shares. In accordance with
this program, on a yearly basis, the Banks Board of Directors may grant Class
E shares for each Director worth US$10,000, except in the case of the
Chairman  of the Board, who is granted an amount of US$15,000, all based on BLADEXs
closing  price in the New York Stock Exchange at the last trading date preceding the
grant. The  restricted stock will have a cliff vesting after five years. Under this plan
9,547 Class  E common shares were issued and compensation costs charged
against income in  2003 was US$94,993.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Stock
Option Plan 2003  Directors
| | -- | ----------------------------------

| | On
July 19, 2003, the Banks Board of Directors approved a stock option plan for
Directors, which allows them have the option to purchase Class E shares for
an  equivalent amount of US$10,000, and for the Chairman of the Board, an equivalent
amount of  US$15,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
new stock option plan has the following features:
| | -----------------------------------------------------

| | a. | The
plan consists of indexed options based on a customized Latin America general market
index (Optimized Equity Index  Merval, Ibovespa, IndMex, IPSA, IGBVL, IGBC, IBC).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. | The
exercise price will be adjusted based on the change in a relevant market index.
| | -- | -----------------------------------------------------------------------------------

| | c. | The
option term will be seven years, and there is a cliff vesting in four years.
| | -- | --------------------------------------------------------------------------------

| | d. | Grants
will be calculated based on the Black-Scholes derived expected value of the award.
| | -- | -----------------------------------------------------------------------------------------

| | No
options have yet been granted under the new plan.
| | ----------------------------------------------------

| | c) | Stock
Option Plans  Directors
| | -- | ------------------------------

| | During
2000, the Banks Board of Directors approved a stock option plan for non-employee
directors of the Bank. The exercise price of each option must equal 100% of the fair
market value of the stock covered by such option at the date the option is granted. The
options granted become 100% exercisable one year after the date granted and expire on the
fifth year after the date granted.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 19, 2003, the Banks Board of Directors approved to discontinue this plan;
consequently, no additional options will be granted.
| | ---------------------------------------------------------------------------------------------------------------------------------------

---

F-30

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | d) | Stock
Option Plans - Employees
| | -- | ------------------------------

| | For
the 1995 Stock Option Plan, options were granted form time-to-time at a purchase price
equal to the average fair market value of the common stock covered by each option on the
date that the option was granted. One third of the options may be exercised on each
successive year after the grant date and expire on the tenth year after the grant date.
For the 1999 Stock Option Plan, the terms of the plan are the same as the 1995 Plan with
the exception that one third of the options become exercisable two years after grant and
become exercisable in full after the fourth year with expiration on the tenth anniversary
after the grant day.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 19, 2003, the Banks Board of Directors approved to discontinue the 1995 and
1999 Stock Option Plans for employees and no additional options will be granted under
these plans.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of the status of the options granted to the directors and employees is presented
below:
| | -------------------------------------------------------------------------------------------------

|                                             | December
      31, |        
|-------------------------------------------- | ------------------ | -------
|                                             |                    |        
|                                             | 2003               |        
|                                             | Shares             |        
|Outstanding
      at beginning of the year   |                    | 247,642
|Granted                                      |                    | 0      
|Exercised                                    |                    | 0      
|Forfeited                                    |                    | (19,017
|                                             |                    |        
|Outstanding
      at end of the year         |                    | 228,625
|                                             |                    |        
|Options
      exercisable at end of the year |                    | 191,210
|                                             |                    |        
|Weighted
      average fairvalue of          |                   
|options
      granted during the year        |                    |        
|                                             |                    |        

|                               | Options
      Outstanding                       |         | Options
      Exercisable           |         
|------------------------------ | ----------------------------------------------- | ------- | ----------------------------------- | --------
|Range
      of Exercise Prices | Number
      Outstanding at
      Dec. 31, 2003 |         | Wtd.
      Avg.
      ExercisePrice |         
|                              
|US$20.00
      - $30.00        |                                                 | 57,482  |                                     | US$23.12
|US$30.01
      - $40.00        |                                                 | 48,473  |                                     | 32.88   
|US$40.01
      - $50.00        |                                                 | 84,670  |                                     | 42.04   
|Greater
      than US$50.00    |                                                 | 38,000  |                                     | 51.19   
|                               |                                                 |         |                                     |         
|Total                          |                                                 | 228,625 |                                     | US$36.86
|                               |                                                 |         |                                     |         

| | In
addition, on July 19, 2003, the Banks Board of Directors approved a new stock
option  plan for employees (indexed options) with the same features as the Stock Option
Plan 2003   Directors described above. No options have yet been granted under this
new plan.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-31

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
fair value of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions for 2001:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          |  |     |  | Stock
      Option Plans | 
|----------------------------------------- |  | --- |  | ------------------------ | 
|                                          |  |     |  | Directors                | 
|Weighted
      average fair value option  |  | US$ |  | 7.09                     | 
|Weighted
      average expected life      |  |     |  | 2.35                     | 
|Expected
      volatility                 |  |     |  | 30%                      | 
|Risk-free
      interest rate             |  |     |  | 3.45%                    | 
|Expected
      annual dividends per share |  |     |  | n/a                      | 
|Expected
      annual forfeitures         |  |     |  | n/a                      | 

| | e) | Contribution
Plans
| | -- | ------------------

| | The
Bank sponsors a defined contribution plan for its expatriate officers. The Banks
contributions are determined as a percentage of the eligible officers annual
salary,  with each officer contributing an additional amount withheld from his salary and
deposited  in a savings account with the Bank, earning interest at market rates. During
the years  2003, 2002 and 2001, the Bank charged to salaries expense US$139,934,
US$118,900, and  US$50,764, respectively. As of December 31, 2003 and 2002, the
accumulated liability  payable under this contribution plan amounted to US$571,755 and
US$431,821, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Deferred
Equity Unit Plan (the DEU Plan):
| | -------------------------------------------

| | The
DEU Plan allowed eligible employees to invest up to 25% of their annual profit sharing in
Class E shares (the Participation Shares). The employee receives
a  grant of one DEU for every two participating shares. Every DEU represented the right
to  receive a Class E share. On July 19, 2003, the Banks Board of
Directors  approved to discontinue this plan and consequently, no additional options will
be granted  under this plan.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2003, 2002 and 2001, the Bank provisioned the market value of the related Class  E shares
of US$1,863, US$(3,011) and US$3,591, respectively, corresponding to  122 deferred equity
units exercisable in February 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Deferred
Compensation Plan (the DC Plan):
| | -------------------------------------------

| | The
DC Plan has two separate features. Under the first component of the DC Plan, the Bank may
grant to each eligible employee a number of deferred equity units equal to the product of
(x) an amount equal to a percentage, not to exceed 3%, of the employees
compensation, divided by (y) the fair market value of a Class E share. Each
deferred equity unit represents the right to receive a Class E share (or the
economic equivalent thereof). Employees will vest in the deferred equity units after
three  years of service (which may be either before or after the deferred equity unit
award).  Distributions are made in respect of deferred equity units on the later of (i)
the date  the vested deferred equity units are credited to an employees account and
(ii) ten  years after the employee is
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-32

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | first
credited with deferred equity units under the  DC Plan.  Participating employees receive
dividends with respect to their vested deferred  equity  units, and receive additional
deferred equity units in lieu of a dividend with  respect to  their unvested deferred
equity units. The second component allows employees  who are not  citizens or residents
of the United States to defer a percentage of their  compensation,  and receive
discretionary matching cash contribution. In no event shall  the value of (i)  the
discretionary matching cash contribution made on behalf of an  employee and (ii) the
grant of deferred equity units made to such employees exceed 6% of  the employees
annual base compensation. Under the DC Plan, 30,000 Class E shares  were
reserved.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 19, 2003, the Banks Board of Directors approved to discontinue this plan. No
additional options will be granted under this plan.
| | -----------------------------------------------------------------------------------------------------------------------------------------

| | The
following presents a detail of changes in the deferred equity units under the DC Plan, as
of December 31, 2003, 2002 and 2001:
| | ----------------------------------------------------------------------------------------------------------------------------------

|                                               | December
      31, |       
|---------------------------------------------- | ------------------ | ------
|                                               |                    |       
|                                               | 2003               |       
|Outstanding
      at the beginning of the year |                    | 9,114 
|Granted                                        |                    | 20,140
|Forfeited                                      |                    | (281  
|Exercised                                      |                    | (83   
|                                               |                    |       
|Outstanding
      at end of the year           |                    | 28,890
|                                               |                    |       

| | The
expenses provisioned for 2003, 2002 and 2001, under this plan, were US$58,573, US$49,122
and US$175,798, respectively.
| | --------------------------------------------------------------------------------------------------------------------------

---

F-33

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(17) | Earnings
(loss) Per Share
|---- | -------------------------

| | The
following is a reconciliation of the income and share data used in the basic and diluted
earnings (loss) per share computations for the dates indicated:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                         | December
      31, | 
|-------------------------------------------------------- | ------------------ | 
|                                                         |                    | 
|                                                         | 2003               | 
|Income
      (loss) from continuing operations before    |                    | 
|cumulative
      effect of accounting changes            | US$                | 
|Discontinued
      operations                            |                    | 
|                                                         |                    | 
|Cumulative
      effect of accounting change             |                    | 
|                                                         |                    | 
|                                                         |                    | 
|Less:                                                    |                    | 
|Preferred
      stock dividends                          |                    | 
|                                                         |                    | 
|Income
      (loss) available to common stockholders for |                    | 
|both,
      basic and diluted EPS                        | US$                | 
|                                                         |                    | 
|Weighted
      average common shares outstanding         |                    | 
|applicable
      to basic EPS                            |                    | 
|                                                         |                    | 
|Basic
      earnings (loss) per share:                   |                    | 
|Income
      (loss) from continuing operations before    |                    | 
|cumulative
      effect of accounting change             | US$                | 
|Discontinued
      operations                            |                    | 
|Cumulative
      effect of accounting change             |                    | 
|                                                         |                    | 
|Net
      income (loss) per share                        | US$                | 
|                                                         |                    | 
|Weighted
      average common shares outstanding         |                    | 
|applicable
      to diluted EPS                          |                    | 
|Effect
      of dilutive securities -                    |                    | 
|Stock
      option plans                                 |                    | 
|                                                         |                    | 
|Adjusted
      weighted average common shares            |                    | 
|outstanding
      applicable to diluted EPS              |                    | 
|                                                         |                    | 
|Diluted
      earnings (loss) per share:                 |                    | 
|Income
      (loss) from continuing operations before    |                    | 
|cumulative
      effect of accounting change             | US$                | 
|Discontinued
      operations                            |                    | 
|Cumulative
      effect of accounting changes            |                    | 
|                                                         |                    | 
|Net
      income (loss) per share                        | US$                | 
|                                                         |                    | 

| | At
December 31, 2003 and 2002, weighted average options for 145,537 and 149,325,
respectively, were excluded from the computation of diluted EPS because the options
exercise price was greater than the average quoted market price of the Banks common
stock.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-34

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(18) | Financial
Instruments with Off-Balance Sheet Credit Risk
|---- | --------------------------------------------------------

| | In
the normal course of business, to meet the financing needs of its customers, the Bank is
party to financial instruments with off-balance sheet credit risk. These financial
instruments involve, to varying degrees, elements of credit and market risk in excess of
the amount recognized in the consolidated balance sheets. Credit risk represents the
possibility of loss resulting from the failure of a customer to perform in accordance with
the terms of a contract.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Banks outstanding financial instruments with off-balance sheet credit risk, at the
dates indicated, were as follows:
| | -------------------------------------------------------------------------------------------------------------------------

|                                                 |  | December
      31, | 
|------------------------------------------------ |  | ------------------ | 
|                                                 |  |                    | 
|                                                 |  | 2003               | 
|                                                
|Confirmed
      letters of credit                |  | US$                | 
|Stand-by
      letters of credit and guarantees: | 
|Country
      risk                               |  |                    | 
|Commercial
      risk                            |  |                    | 
|Credit
      commitments:                        | 
|At
      fixed interest rates                    |  |                    | 
|At
      floating interest rates                 |  |                    | 
|                                                 |  |                    | 
|                                                 |  | US$                | 
|                                                 |  |                    | 

| | As
of December 31, 2003, the maturity profile of the outstanding financial instruments with
off-balance sheet credit risk is as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------

|Within 1 year     |  | US$ |  | 262,055,788 | 
|----------------- |  | --- |  | ----------- | 
|From 1 to 2 years |  |     |  | 28,846,154  | 
|From 3 to 4 years |  |     |  | 41,956,744  | 
|                  |  |     | 
|                  |  | US$ |  | 332,858,686 | 
|                  |  |     | 

---

F-35

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | As
of December 31, 2003 and 2002 the breakdown of the Banks off-balance sheet exposure
by country risk is as follows:
| | ----------------------------------------------------------------------------------------------------------------------

|                         | December
      31, |            
|------------------------ | ------------------ | -----------
|                         |                    |            
|Country                  | 2003               |            
|                        
|Argentina                | US$                | 5,000,000  
|Bolivia                  |                    | 55,743     
|Brazil                   |                    | 126,466,105
|Chile                    |                    | 1,333,647  
|Colombia                 |                    | 40,000     
|Costa
      Rica         |                    | 15,883,240 
|Dominican
      Republic |                    | 12,126,168 
|Ecuador                  |                    | 65,532,104 
|El Salvador              |                    | 5,101,978  
|Guatemala                |                    | 2,000,000  
|Jamaica                  |                    | 11,250,000 
|Mexico                   |                    | 33,738,019 
|Nicaragua                |                    | 5,798,000  
|Panama                   |                    | 162,123    
|Peru                     |                    | 41,371,559 
|Other                    |                    | 7,000,000  
|                         |                    |            
|                         | US$                | 332,858,686
|                         |                    |            

| | Letters
of Credit and Guarantees
| | --------------------------------

| | The
Bank, on behalf of its institutional client base, advises and confirms letters of credit
to facilitate foreign trade transactions. When confirming letters of credit, the Bank adds
its own unqualified assurance that the issuing bank will pay and that if the issuing bank
does not honor drafts drawn on the credit, the Bank will.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Bank provides stand-by letters of credit and guarantees (including country risk coverage),
which are issued on behalf of institutional customers in connection with financing between
the customers and third parties. The Bank applies the same credit policies used in its
lending process, and, once issued, the commitment is irrevocable and remains valid until
its expiration. Credit risk arises from the Banks obligation to make payment in the
event of a customers contractual default to a third party. Risks associated with
such stand-by letters of credit and guarantees are included in the evaluation of overall
credit risk.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Bank issues stand-by letters of credit and guarantees to provide coverage for country risk
arising from the risk of convertibility and transferability of local currency of countries
in the Region into hard currency. However, in a few cases, the Bank also issues stand-by
letters of credit and guarantees to provide coverage for country risk arising from
political risks, such as expropriation, nationalization, war and/or civil disturbances.
Nevertheless, the Bank has the option to choose between four alternatives that allow the
Bank to recover the amounts paid under these guarantees in case of being executed.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-36

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | Credit
Commitments
| | ------------------

| | Commitments
to extend credit are a combination of either non-binding or legal agreements to lend to a
customer. Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee to the Bank. As some commitments expire without being
drawn down, the total commitment amounts do not necessarily represent future cash
requirements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Other
commitments
| | -----------------

| | During
November 2003, the Bank made a commitment to invest US$5,000,000 in an investment fund,
registered in NAFTA, whose main objective is to invest in the Mexican export industry and
its supply chain. As of December 31, 2003, the total disbursement related with this
investment fund was US$328,135, recorded as other assets.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Unused
commitments available to the Bank
| | ----------------------------------------

| | During
2003 the Bank signed borrowing agreements with financial institutions for US$125,000,000
and US$40,000,000. The purpose of these commitments is exclusively to finance trade in
Latin America and the Caribbean, with maturities up to 18 and 24 months, respectively.
Commitment fees of 0.50% will be charge on the unused available credit of these
commitments, plus an availability fee of 0.25% for the US$125,000,000 commitment.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2003, the Bank had draw down US$20,000,000 from the $40,000,000 commitment
(See Note 12). On January 8, 2004, the Bank made a second draw down for the remaining
available commitment of US$20,000,000. Borrowings under this agreement are at interest
rates ranging from 1.35% to 3.35% above LIBOR.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(19) | Derivative
Financial Instruments
|---- | --------------------------------

| | Effective
January 1, 2001, the Bank adopted SFAS 133 related to the accounting of financial
instruments that are considered to be derivatives, which requires that these financial
instruments be booked on the consolidated balance sheets at their fair value. For control
purposes, these financial instruments are recorded at their nominal amount (notional
amount) on the memorandum accounts.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the normal course of business, the Bank utilizes interest rate and foreign exchange
derivatives primarily for hedging purposes in its consolidated balance sheets management
activities. All of the interest rate swaps and foreign exchange forward contracts entered
during 2003 and 2002 were made by the Bank to hedge interest rate and foreign exchange
risks arising from the Banks lending activity and the issuance of non-US dollar
denominated short-term Euro Commercial Paper and Euro Medium-Term Notes. Interest rate
swaps are made either in a single currency or cross-currency for a prescribed period to
exchange a series of interest rate flows, which involve fixed for floating interest
payment or vice-versa. The Bank also engages in some foreign exchange trades to serve
customers transaction needs. All positions are hedged with an offsetting contract
for the same currency. The Bank manages and controls the risks on these foreign exchange
trades by establishing counter party credit limits by client, and policies that do not
allow for open positions.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-37

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | Types
of Derivative and Foreign Exchange Instruments
| | ----------------------------------------------------

| | Derivative
and foreign exchange instruments negotiated by the Bank are executed mainly
over-the-counter (OTC). These contracts are executed between two counter
parties that negotiate specific agreement terms, including notional amount, exercise price
and maturity.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
purposes of asset/liability activities, the Bank uses the following instruments:
| | ------------------------------------------------------------------------------------

| | Interest
rate swapsare contracts in which a series of interest rate flows in a single currency
are exchanged over a prescribed period. The Bank has designated these derivative
instruments as fair value hedges, cash flow hedges and freestanding derivatives.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cross-currency
swapsare contracts that generally involve the exchange of both interest and principal
amounts in two different currencies. The Bank has designated these derivative
instruments as fair value hedges.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Forward
foreign exchange contractrepresents an agreement to purchase or sell foreign currency
on a future date at agreed-upon terms.The Bank has not designated a hedging
relationship to these derivative instruments.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table provides quantitative information on derivative financial instruments
outstanding at December 31, 2003 and 2002:
| | ------------------------------------------------------------------------------------------------------------------------------------

|                          | December
      31, 2003 |             | December
      31, 2002 |          
|------------------------- | ----------------------- | ----------- | ----------------------- | ---------
|                          |                         |             | Fair
      Value        |          
|(In
      US Dollar)      | NominalAmount           |             | Asset                   |          
|Fair
      Value Hedges:  |                         |             |                         |          
|Interest
      rate swaps |                         | 0           |                         | 0        
|Cross-currency
      swap |                         | 61,425,806  |                         | 1,684,209
|                         
|Cash
      Flow Hedges:   |                        
|Interest
      rate swaps |                         | 60,000,000  |                         | 0        
|                         
|Freestanding:             |                        
|Interest
      rate swaps |                         | 0           |                         | 0        
|Cross-currency
      swap |                         | 50,129,509  |                         | 571,875  
|Foreign
      exchange    |                        
|forward
      contracts   |                         | 0           |                         | 0        
|                          |                         |             |                         |          
|Total                     |                         | 171,555,315 |                         | 2,256,084
|                          |                         |             |                         |          

| | (1) | Changes
in fair value of derivatives used as fair value hedges (net of changes in fair  value of
hedged instruments) and freestanding are recognized in the statement of  operations as
derivatives and hedging activities. Changes in fair value related to cash  flow hedges
are recognized as a component of other comprehensive income (loss).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Include
US$408,248 recorded as interest expense.
| | --- | ------------------------------------------------

| | All
derivative contracts will mature in 2004. Interest rate swaps maturing on March 29, 2004,
match the maturity date of the related medium-term borrowings (hedged item).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-38

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(20) | Accumulated
Other Comprehensive Income (Loss)
|---- | ---------------------------------------------

| | As
of December 31, 2003 and 2002, the breakdown of accumulated other comprehensive income
(loss) was as follows:
| | ----------------------------------------------------------------------------------------------------------------

|                                                   |  | SFAS
      115 |  | SFAS133    |  | TOTAL      |  
|-------------------------------------------------- |  | -------------- |  | ---------- |  | ---------- | -
|                                                   |  |                |  |            |  |            |  
|Balance
      as of December 31, 2001              |  | US$            |  | 34,416     |  | (540,696   | )
|Unrealized
      gain (loss) arising from the year |  |                |  | 2,967,166  |  | (2,578,603 | )
|                                                   |  |                |  |            |  |            |  
|Balance
      as of December 31, 2002              |  |                |  | 3,001,582  |  | (3,119,299 | )
|Unrealized
      gain arising from the year        |  |                |  | 7,258,933  |  | 2,735,010  |  
|                                                   |  |                |  |            |  |            |  
|Balance
      as of December 31, 2003              |  | US$            |  | 10,260,515 |  | (384,289   | )
|                                                   |  |                |  |            |  |            |  

|(21) | Fair
Value Disclosure of Financial Instruments
|---- | ----------------------------------------------

| | The
following disclosures represent the Banks best estimate of the fair value of
on-and-off-balance financial instruments. The following assumptions were used by
management in estimating the fair values of each type of financial instruments:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Financial
instruments with carrying value equal to fair value
| | --- | -------------------------------------------------------------

| | The
carrying value of certain financial assets, including cash and due from banks,
interest-bearing deposits with banks, securities purchased under agreements to resell,
accrued interest receivable, customers liabilities under acceptances and certain
financial liabilities including, interest, taxes and other liabilities and acceptances
outstanding, as a result of their short-term nature, is considered to be equal to fair
value.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Investment
securities
| | --- | ---------------------

| | The
fair value of investment securities has been based upon current market quotations, where
available. If quoted market prices are not available, fair value has been estimated based
upon quoted price of similar instruments.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Loans
| | --- | -----

| | The
fair value of the performing loan portfolio has been determined principally based upon a
discounted analysis of anticipated cash flows adjusted for expected credit losses. The
loans have been grouped to the extent possible, into homogeneous pools, segregated by
maturity and the weighted average maturity of the loans within each pool. Depending upon
the type of loan involved, maturity assumptions have been based on either contractual or
expected maturity.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Credit
risk has been factored into the present value analysis of cash flows associated with each
loan type, by allocating allowances for loan losses. The allocated portion of the
allowance, adjusted by a present value factor based upon the timing of expected losses,
has been deducted from the gross cash flows prior to calculating the present value. The
fair value of the non-performing loans has been determined net of related allowance for
loan losses.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Deposits
| | --- | --------

| | The
fair value of demand deposits is equal to the amount payable on demand at the reporting
date. For time deposits, fair value has been estimated based upon interest
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-39

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | rates
currently  being offered on deposits with similar characteristics and maturities.
| | ---------------------------------------------------------------------------------------

| | (e) | Short-term
borrowings and placements
| | --- | ------------------------------------

| | The
fair value of short-term borrowings and placements is estimated using discounted cash
flow  analysis based on the current incremental borrowing rates for similar types of
borrowing  arrangements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | Medium
and long-term borrowings and placements
| | --- | ----------------------------------------------

| | The
fair value of medium and long-term borrowings and placements is estimated using
discounted  cash flow analysis based on the current incremental borrowing rates for
similar types of  borrowing arrangements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | Derivative
financial instruments
| | --- | --------------------------------

| | The
fair value of derivatives financial instruments and options is based upon quoted market
prices.
| | ---------------------------------------------------------------------------------------------------

| | (h) | Commitments
to extend credit, stand-by letters of credit, and financial guarantees written
| | --- | ------------------------------------------------------------------------------------------

| | The
fair value of commitments is estimated using the fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements and the
present creditworthiness of the counter parties. For fixed-rate loan commitments, fair
value also considers the difference between current levels of interest rates and the
committed rates. The fair value of guarantees and letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to terminate them or
otherwise settle the obligations with the counterparts at the reporting date.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
values have been determined based on applicable requirements and do not necessarily
represent the amount that would be realized upon liquidation. The following table
provides  information on the carrying value and fair value of the Banks financial
instruments:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  | December
      31, | 
|------------------------------------- |  | ------------------ | 
|                                      |  | 2003               | 
|(In
      US Dollar)                  |  | CarryingValue      | 
|Financial
      assets:               |  |                    | 
|Instruments
      with carrying value | 
|equal
      to fair value             |  | 427,100,870        | 
|Securities
      available for sale   |  | 48,340,618         | 
|Securities
      held to maturity     |  | 29,452,040         | 
|Loans,
      net of allowance         |  | 2,046,401,596      | 
|Derivatives
      financial           | 
|instruments
      - assets            |  | 2,256,084          | 
|                                      | 
|Financial
      liabilities:          | 
|Instruments
      with carrying value | 
|equal
      to fair value             |  | 64,754,563         | 
|Time
      deposits                   |  | 683,584,579        | 
|Short-term
      borrowings and       | 
|placements                            |  | 687,214,017        | 
|Medium
      and long-term borrowings | 
|and
      placements                  |  | 485,516,431        | 
|Derivatives
      financial           | 
|instruments
      - liabilities       |  | 13,021,310         | 
|Commitments
      to extend credit,   | 
|stand-by
      letters of credits     | 
|and
      guarantees                  |  | 332,858,686        | 

---

F-40

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(22) | Impact
of SFAS 133 on the Banks Financial Statements
|---- | -----------------------------------------------------

| | SFAS
133, as amended, which deals with the accounting for derivatives, was adopted on January
1, 2001. The adoption of SFAS 133 affected the cumulative effect of accounting
change account which, impacted the consolidated statement of operations, as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                 |  | Options |  | Interest
      RateSwaps |  | Total    |  
|------------------------------------------------ |  | ------- |  | ------------------------ |  | -------- | -
|Cumulative
      effect of accounting change:    |  |         |  |                          |  |          |  
|Transition
      adjustment (one time adjustment | 
|made
      on January 1, 2001)                   |  | US$     |  | 1,358,760                |  | (229,347 | )
|                                                 |  |         |  |                          |  |          |  

| | Also,
the adoption of SFAS 133 affected the other  comprehensive  income (loss)
account in the  consolidated  balance sheets.  (See Note 20)
| | ----------------------------------------------------------------------------------------------------------------------------------------------

|(23) | Business
Segment Information
|---- | ----------------------------

| | The
Banks  businesses  are grouped into three  segments for  management  reporting  and
analysis  purposes:  Short-term  loans,  medium-term  loans and contingencies  (letters
of credit,  guarantees and other fee generating  businesses).  These segments are  based
upon products and services offered and are identified in a manner  consistent with the
requirements  outlined on Statement  of Financial  Accounting Standard No. 131,
Disclosures about Segments of an Enterprise and Related  Information.  The
segment  results  show the  financial  performance  of the major lines of  business.
These  results are  determined  based on the Banks  management accounting process,
which assigns consolidated balance sheets,  revenue and expense items to each reportable
line of  business on a systematic basis.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
short-term  loans  (original  term of up to 365 days)  represent the principal  activity
of the Bank, and constitute  mostly  short-term  trade related  financing to its
stockholders  banks and other selected  commercial  banks in the Region,  including
stockholder  banks which then on-lend to  businesses  engaged in foreign  trade,  to
state owned export  institutions,  and to a  lesser extent to private entities.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Medium-term
loans  (original  term of over one to five years,  and  exceptionally  more than five
years) were mainly granted to  selected commercial banks in the Region, to support the
medium-term financing needs of the Banks clients.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-41

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

| | The
contingencies  constitute mainly  guarantees and stand-by or commercial  letters of
credit covering  commercial and country  risk.  This  business  segment is the primary
component of fee income  generation.  Additional  components  of other income are
commissions  earned on loan  origination.  The following  table presents  certain
information  regarding the Banks  continuing  operations by segment:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Business Segment
Analysis (1)

|(In US$ million)         
|-------------------------
|                         
|2003                     
|                         
|Loans
      and selected 
|securities(3)            
|Short-term               
|Medium-term              
|                         
|Loan
      portfolio     
|Acceptances
      and    
|contingencies(4)         
|                         
|Credit
      portfolio(5)
|                         
|                         
|                         
|2002                     
|                         
|Loans
      and selected 
|securities(3)            
|Short-term               
|Medium-term              
|                         
|Loan
      portfolio     
|Acceptances
      and    
|contingencies
      (4)  
|                         
|Credit
      portfolio(5)
|                         
|                         
|                         
|2001                     
|                         
|Loans
      and selected 
|securities(3)            
|Short-term               
|Medium-term              
|                         
|Loan
      portfolio     
|Acceptances
      and    
|contingencies(4)         
|                         
|Credit
      portfolio(5)
|                         

| | (1) | The
numbers set out in these tables have been rounded and accordingly may not total exactly.
| | --- | --------------------------------------------------------------------------------------------

| | (2) | To
reconcile  the net  operating  income  reported on the  preceding  table with the net
income  reported on the  consolidated  statement of operations for the years ended
December 31, 2003,  2002 and 2001, the following  items should be included:  (a)
reversal  (provisions) for credit losses for $58.9 million,  US$(278.8) million and
US$(77.1)  million,  for the years ended  December 31, 2003, 2002 and 2001,
respectively;  (b) impairment loss on securities of US$(1.0)  million,  US$(44.3) million
and  US$(40.3)  million for the years ended  December  31,  2003,  2002 and 2001,
respectively;  (c)  cumulative  effect of  accounting  change  (SFAS 133) for US$1.1
million  for the year ended  December  31,  2001;  (d)  derivatives  and  hedging
activities  from market  valuation for US$(8.0)  million,  US$(0.3)  million and US$7.4
million for the years ended December  31, 2003,  2002 and 2001,  respectively;  and (e)
loss on  operations  and disposal of segment for US$(2.3)  million for the  years ended
December 31, 2002 and 2001.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes
carrying amount of loans, fair value of selected investment  securities and securities
purchased under agreements to  resell.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes
customers  liabilities  under  acceptances  and letters of credit and  guarantees
covering  commercial and country  risk.  Excludes credit  commitments in the average
amount of US$98.2  million,  US$104.5 million and US$92.6 million for the  years ended
December 31, 2003, 2002 and 2001, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes
loan portfolio plus acceptances and contingencies.
| | --- | -----------------------------------------------------------

---

F-42

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.
AND SUBSIDIARIES

Notes to
Consolidated Financial Statements

---

|(24) | Leasehold
Commitments
|---- | ---------------------

| | At
December 31, 2003, a summary of leasehold commitments is as follows:
| | -----------------------------------------------------------------------

|ExpirationYear |  |     |  | Future
      RentalCommitments | 
|-------------- |  | --- |  | ------------------------------ | 
|               |  |     |  |                                | 
|2004           |  | US$ |  | 485,205                        | 
|2005           |  |     |  | 450,925                        | 
|2006           |  |     |  | 165,080                        | 
|2007           |  |     |  | 169,207                        | 
|2008           |  |     |  | 84,626                         | 
|               | 
|               |  | US$ |  | 1,355,043                      | 
|               | 

| | Occupancy
expense for the years ended  December 31, 2003,  2002 and 2001,  amounted to US$293,289,
US$408,993 and  US$681,412,  respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------

|(25) | Litigation
|---- | ----------

| | BLADEX
is not engaged in any  litigation  that is  material  to the Banks  business,  and to
the best  knowledge  of the Banks  management, which is likely to have a material
adverse effect on its business, financial condition or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(26) | Discontinued
Operations
|---- | -----------------------

| | At
June 30, 2002,  the Banks  Board of  Directors  approved  the closing of its  structured
transactions  finance unit (BLADEX  Financial Services,  LLC and BLADEX Securities,  LLC)
in New York, as part of its restructuring program. As of December 31, 2002  and 2001, the
loss from operations and disposal of segment,  totaled US$2,346,094 (including
US$1,531,789 of loss from disposal)  and US$2,388,114, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(27) | Capital
Reserves
|---- | ----------------

| | Effective
on June 30, 2002, the Bank  transferred  US$210,000,000  from the Capital  Reserves
account to the Retained  Earnings  account.  This  reclassification  was  approved  by
the  Banks  Board  of  Directors,  and  was  previously  authorized  by the
Superintendence of Banks in Panama.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(28) | Bank
of America Partnership
|---- | ---------------------------

| | On
July 2003, BLADEX and Bank of America  Corporation  completed a strategic  alliance that
offers Bank of Americas U.S. Dollar  clearing  services to BLADEX clients in the Latin
America and Caribbean  region.  This alliance offers an opportunity to combine  BLADEXs
reliable trade finance capabilities with Bank of Americas widely recognized product
excellence in clearing services.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

F-43

---

BANCO
LATINOAMERICANO DE EXPORTACIONES, S. A.AND SUBSIDIARIES

Notes to Consolidated Financial Statements

---

|(29) | Summary
of Unaudited Quarterly Financial Information
|---- | ----------------------------------------------------

|                                                                     | 2003
|-------------------------------------------------------------------- | ----
|(In
      US$ thousand, except per share data)                       |     
|                                                                    
|Interest
      income                                                | US$ 
|Interest
      expense                                               |     
|                                                                    
|Net
      interest income                                            |     
|Reversal
      of provision for loan losses                          |     
|                                                                    
|Net
      interest income after reversal of loan losses              |     
|Commission
      income, net                                         |     
|Provision
      for loan losses on off-balance sheet credit risk     |     
|Derivatives
      and hedging activities                             |     
|Impairment
      loss on securities                                  |     
|Gain
      on early extinguishment of debt                           |     
|Gain
      on sale of securities available for sale                  |     
|Gain
      (loss) on foreign currency exchange                       |     
|Other
      income                                                   |     
|Operating
      expenses                                             |     
|                                                                    
|Net
      income                                                     | US$ 
|                                                                    
|Net
      income available to common stockholders                    | US$ 
|                                                                    
|Earnings
      per share (after dividends on preferred stock)        | US$ 
|                                                                     |     
|Diluted
      earnings per share                                     | US$ 
|                                                                     |     
|Average
      number of common shares outstanding (thousand)         |     
|                                                                    
|                                                                    
|                                                                     | 2002
|(In
      US$ thousand, except per share data)                       |     
|                                                                    
|Interest
      income                                                | US$ 
|Interest
      expense                                               |     
|                                                                    
|Net
      interest income                                            |     
|Provision
      for loan losses                                      |     
|                                                                    
|Net
      interest income (loss) after provision for loan losses     |     
|Commission
      income, net                                         |     
|Provision
      for loan losses on off-balance sheet credit risk     |     
|Derivatives
      and hedging activities                             |     
|Impairment
      loss on securities                                  |     
|Gain
      on early extinguishment of debt                           |     
|Gain
      on sale of securities available for sale                  |     
|Gain
      (loss) on foreign currency exchange                       |     
|Other
      income                                                   |     
|Operating
      expenses                                             |     
|                                                                    
|Income
      (loss) from continuing operations                       |     
|Discontinued
      operations:                                       |     
|Loss
      from operations and disposal of business segment          |     
|                                                                    
|Net
      income (loss)                                              | US$ 
|                                                                    
|Net
      income (loss) available to common stockholders             | US$ 
|                                                                    
|Earnings
      (loss) per share (after dividends on preferred stock) | US$ 
|                                                                     |     
|Diluted
      earnings (loss) per share                              | US$ 
|                                                                     |     
|Average
      number of common shares outstanding (thousand)         |     
|                                                                    

---

F-44

---



# EXHIBIT
  INDEX

# Exhibit

|Exhibit 11 |  | Certifications
      required by Rule 13a-14(a) under the Securities Exchange Act of 1934
|---------- |  | -----------------------------------------------------------------------------------------

|Exhibit 12 |  | Certifications
      required by Rule 13a-14(b) under the Securities Exchange Act of 1934
|---------- |  | -----------------------------------------------------------------------------------------





---