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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Bbva Banco Frances S.A. | NYSE:BFR | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 11.06 | 0.00 | 01:00:00 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of March, 2017
Commission File Number: 001-12568
BBVA FRENCH BANK S.A.
(Translation of registrants name into English)
Reconquista 199, 1006
Buenos Aires, Argentina
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ☐ No ☒
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
BBVA French Bank S.A.
Item |
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1. |
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2016
- 1 - |
BALANCE SHEETS AS OF
DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
Stated in thousands of pesos
- 2 - |
- 3 - |
(Cont.)
- 4 - |
MEMORANDUM ACCOUNTS
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
DEBIT ACCOUNTS |
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Contingent |
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Guaranties received |
22,489,359 | 16,925,557 | ||||||
Contra contingent debit accounts |
1,104,103 | 1,558,329 | ||||||
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23,593,462 | 18,483,886 | |||||||
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Control |
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Receivables classified as irrecoverable |
826,967 | 690,936 | ||||||
Other (Note 5.f.) |
232,449,657 | 116,961,962 | ||||||
Contra control debit accounts |
1,686,184 | 2,524,692 | ||||||
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234,962,808 | 120,177,590 | |||||||
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Derivatives (Exhibit O) |
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Notional amount of non-deliverable forward transactions |
2,623,708 | 5,809,784 | ||||||
Interest rate swap |
2,251,362 | 963,368 | ||||||
Contra derivatives debit accounts |
3,186,904 | 5,843,638 | ||||||
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8,061,974 | 12,616,790 | |||||||
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TOTAL |
266,618,244 | 151,278,266 | ||||||
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CREDIT ACCOUNTS |
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Contingent |
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Credit lines granted (unused portion) covered by debtor classification regulations (Exhibits B, C and D) |
176,296 | 327,251 | ||||||
Guaranties provided to the BCRA |
227,946 | 102,603 | ||||||
Other guaranties given covered by debtor classification regulations (Exhibits B, C and D) |
264,058 | 342,972 | ||||||
Other guaranties given non covered by debtor classification regulations |
87,776 | 273,808 | ||||||
Other covered by debtor classification regulations (Exhibits B, C and D) |
348,027 | 511,695 | ||||||
Contra contingent credit accounts |
22,489,359 | 16,925,557 | ||||||
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23,593,462 | 18,483,886 | |||||||
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Control |
||||||||
Items to be credited |
1,436,763 | 1,369,765 | ||||||
Other |
249,421 | 1,154,927 | ||||||
Contra control credit accounts |
233,276,624 | 117,652,898 | ||||||
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234,962,808 | 120,177,590 | |||||||
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Derivatives (Exhibit O) |
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Notional amount of non-deliverable forward transactions |
3,186,904 | 5,843,638 | ||||||
Contra credit derivatives accounts |
4,875,070 | 6,773,152 | ||||||
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8,061,974 | 12,616,790 | |||||||
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TOTAL |
266,618,244 | 151,278,266 | ||||||
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The accompanying notes 1 through 23 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.
- 5 - |
STATEMENTS OF INCOME FOR THE FISCAL YEARS
ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
- 6 - |
The accompanying notes 1 through 23 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.
- 7 - |
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
2016 | 2015 | |||||||||||||||||||||||||||||||
Non capitalized
contributions |
Retained
earnings |
|||||||||||||||||||||||||||||||
MOVEMENTS |
Capital
Stock |
Issuance
premiums |
Adjustments to
stockholders equity (1) |
Legal | Other |
Unappropriated
earnings |
TOTAL | TOTAL | ||||||||||||||||||||||||
1. Balance at beginning of fiscal year |
536,878 | 182,511 | 312,979 | 2,541,620 | 6,357,888 | 3,784,487 | 13,716,363 | 10,331,876 | ||||||||||||||||||||||||
2. Stockholders Meeting held on April 26, 2016 and April 7, 2015 |
||||||||||||||||||||||||||||||||
- Dividends paid in cash |
, | , | , | , | , | (900,000 | ) | (900,000 | ) | (400,000 | ) | |||||||||||||||||||||
- Legal Reserve |
, | , | , | 756,897 | , | (756,897 | ) | , | , | |||||||||||||||||||||||
- Voluntary reserve for future distributions of income |
, | , | , | , | 2,127,590 | (2,127,590 | ) | , | , | |||||||||||||||||||||||
3. Net income for the fiscal year |
, | , | , | , | , | 3,643,672 | 3,643,672 | 3,784,487 | ||||||||||||||||||||||||
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4. Balance at the end of the fiscal year |
536,878 | 182,511 | 312,979 | 3,298,517 | 8,485,478 | 3,643,672 | 16,460,035 | 13,716,363 | ||||||||||||||||||||||||
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(1) | Adjustments to stockolders equity refer to Adjustment to Capital Stock. |
The accompanying notes 1 through 23 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.
- 8 - |
STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW FOR THE
FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
(1) | See note 16 Statements of cash and cash equivalents flow. |
The accompanying notes 1 through 23 and exhibits A through L, N and O and the consolidated financial statements with its notes and exhibits are an integral part of these statements.
- 9 - |
NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
(Stated in thousands of pesos)
1. | CORPORATE SITUATION AND BANKS ACTIVITIES |
1.1 Corporate situation
BBVA Banco Francés S.A. (hereinafter indistinctly referred to as either BBVA Francés or the Bank) has its headquarter in Buenos Aires, Argentina, and operates a 251-branch network.
As from December, 1996, BBVA Francés is part of Banco Bilbao Vizcaya Argentaria S.A.s (BBVA) global strategy, which controls the Bank, direct and indirectly, with 75.95% of the corporate stock of December 31, 2016.
Part of the Banks corporate stock is publicly traded and has been registered with the Buenos Aires Stock Exchange, New York Stock Exchange and Madrid Stock Exchange.
1.2 Capital stock
Changes in the Banks capital stock during the last five fiscal years are as follows:
(1) | Due to the merger of Inversora Otar S.A. into BBVA Francés. |
(2) | The amount of Capital Stock as of December 31, 2016, is fully paid in and authorized for public offering by National Securities Commission (CNV). |
1.3 Registration with CNV as Settlement and Clearing Agent - Comprehensive
The Capital Markets Law Nr. 26,831, enacted on December 28, 2012 and then regulated by CNVs General Resolution Nr. 622/13 on September 5, 2013 sets forth, in its Section 47 that agents are under a duty to register with the CNV for interacting with the market in any of the modalities established in CNVs General Resolution Nr. 622/13. On September 9 and 19, 2014, the Bank was finally registered as Mutual Funds Custodian Agent, and Settlement and Clearing Agent Comprehensive, respectively, under numbers 4 and 42.
- 10 - |
1.4 Responsibility of stockholders
BBVA Francés is a corporation established under the laws of the Argentine Republic, and the responsibility of its stockholders is limited to the value of the paid - in shares, in accordance with Law Nr. 19,550. As a result, in compliance with Law Nr. 25,738, it is hereby informed that neither the foreign capital majority stockholders nor the local or foreign stockholders will respond, in excess of the mentioned paid-in stockholding, for the liabilities arising out of the transactions performed by the financial institution.
2. | SIGNIFICANT ACCOUNTING POLICIES |
2.1 Restatement of the financial statements in equivalent purchasing power
The financial statements have been taken from the Banks books of account in conformity with the standards of the BCRA.
By Communication A 3921 of the BCRA and General Resolution Nr. 441/03 of the CNV, in compliance with Decree 664/03 of the Federal Executive, application of the restatement method on financial statements in equivalent purchasing power has been suspended as from March 1, 2003.
Argentinas professional accounting standards require applying Technical Pronouncement Nr. 6 of the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) (as amended by Technical Resolution Nr. 19) which sets forth that financial statements are to be restated in constant currency when the countrys economic environment exhibits certain characteristics. In the event that the restatement of financial statements in constant currency becomes mandatory, the adjustment should be performed based on the last date on which the Bank adjusted its financial statements to reflect the effects of inflation. This circumstance should be taken into account by users of these financial statements.
2.2 Comparative information
In accordance with BCRA Communication A 4667 and amendments, the Financial Statements and the Exhibits that so specify include the comparative information as of December 31, 2015.
2.3 Valuation methods
The main valuation methods used in the preparation of the financial statements have been as follows:
a) | Foreign currency assets and liabilities : |
As of December 31, 2016 and 2015, such amounts were translated into pesos at the benchmark exchange rate of the BCRA as of the closing date of transactions on the last business day of each fiscal year. The exchange differences were charged to income (loss) for each fiscal year.
b) | Government and private securities : |
| Holdings booked at fair value and instruments issued by the BCRA at fair value: they were valued based on current listed prices or the prevailing present value for each security as of December 31, 2016 and 2015. Differences in listed prices were credited/charged to income for each fiscal year. |
- 11 - |
| Holdings booked at amortized cost and instruments issued by the BCRA at amortized cost: as of December 31, 2016 and 2015, these were valued using the amount of initial recognition, rose on the basis of the interest accrued as per the internal rate of return. |
| Investments in listed private securities, equity and debt instruments: they were valued based on current listed prices as December 31, 2016 and 2015. Differences in listed prices were charged to income for each fiscal year. |
c) | Loans to Government Sector: |
Federal Government secured loans Decree Nr. 1387/2001 :
As of December 31, 2016 and 2015, the secured loans were valued at the highest amount resulting from a comparison between the present value as estimated by BCRA and the book value in accordance with the provisions under BCRAs Communication A 5180. In addition, the amount required to take their book values to their fair realizable values is recorded in a balancing account.
d) | Interest accrual : |
Interest has been accrued according to a compound interest formula in the periods in which it was generated, except interest on transactions in foreign currency, those whose maturity does not exceed 92 days, and adjustable assets and liabilities which were recognized on a linear basis.
e) | Benchmark stabilization coefficient (CER) : |
As of December 31, 2016 and 2015, receivables and payables have been adjusted to the CER as follows:
| Federal government secured loans have been adjusted under Resolution Nr. 50/2002 of the Ministry of Economy, which resolved that the CER business 10 (ten) days prior to the maturity date of the related service will be considered for yield and repayments of the loans. |
| Federal Government Secured Bonds due in 2020: have been adjusted under Resolution Nr. 539/2002 of the Ministry of Economy, which resolved that the CER business 5 (five) days prior to the maturity date of the related service will be considered for yield and repayment of the bonds. |
| Deposits and other assets and liabilities: have been adjusted considering the CER prevailing as of December 31, 2016 and 2015. |
f) | Allowance for loan losses and contingent commitments : |
For loans, other receivables from financial transactions, receivables from financial leases, receivables from sale of property assets and contingent commitments: the allowances have been calculated based on the Banks estimated loan loss risk in light of debtor compliance and the collaterals supporting the respective transactions, as provided by Communication A 2950 and supplemented of the BCRA.
g) | Instruments to be received and to be delivered for spot and forward transactions pending settlement : |
| In foreign currency: they were valued according to the benchmark exchange rate of the BCRA for each currency determined on the last business day of the end of each fiscal year. |
| Securities: with Holdings of government and private securities and Instruments issued by BCRA at fair value and at amortized cost: as of December 31, 2016 and 2015, they were valued according to the method described in 2.3.b). |
- 12 - |
h) | Amounts receivable and payable for spot and forward transactions pending settlement : |
They were valued based on the prices agreed upon for each transaction, plus related premiums accrued as of December 31, 2016 and 2015.
i) | Unlisted Corporate Bonds : |
They were valued at acquisition cost plus income accrued but not collected as of December 31, 2016 and 2015.
j) | Receivables from financial leases: |
As of December 31, 2016 and 2015, they were valued at the present value of the sum of the periodical instalments and the unguaranteed residual value, calculated as per the conditions agreed upon in the respective leases, applying the implicit interest rate thereto.
k) | Investments in other companies : |
| Investments in controlled financial institutions, supplementary activities and authorized were valued based on the following methods: |
| BBVA Francés Valores S.A., Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings), PSA Finance Argentina Compañía Financiera S.A., BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión and Rombo Cía, Financiera S.A.: were valued by applying the equity method, after adjustments to the BCRA accounting standards, if applicable, at the end of each fiscal year. |
| Volkswagen Financial Services Compañía Financiera S.A.: was valued by applying the equity method, at the end of December 31, 2016. |
Although the Bank has a 40% interest ownership in the capital stock and votes of Rombo Cía, Financiera S.A., operational and financial decisions at Rombo Cía, Financiera S.A. are taken together with this companys majority shareholder on a joint control basis.
| Investments in non-controlled financial institutions, supplementary activities and authorized were valued according to the following methods: |
| Prisma Medios de Pago S.A. and Interbanking S.A.: were valued by applying the equity method after adjustments to the BCRA accounting standards if applicable, at the end of each fiscal year. |
| Banco Latinoamericano de Comercio Exterior S.A.: was valued at acquisition cost in foreign currency plus the nominal value of stock dividends received, converted into pesos based on the method described in 2.3.a). |
| Other: valued at acquisition cost, without exceeding their recoverable value. |
| Other non-controlled affiliates were valued based on the following methods: |
| BBVA Consolidar Seguros S.A.: was valued by applying the equity method after adjustments to the BCRA accounting standards if applicable, at the end of each fiscal year. |
| S.W.I.F.T. S.C.R.L.: was valued at acquisition cost in foreign currency plus the nominal value of stock dividends received, converted into pesos based on the method described in 2.3.a). |
- 13 - |
l) | Premises and equipment and Other assets : |
They have been valued at acquisition cost plus increases from prior-year appraisal revaluations, restated as explained in note 2.1 less related accumulated depreciation calculated in proportion to the months of estimated useful life of items concerned (see Exhibit F), without exceeding their recoverable value.
m) | Intangible assets : |
| Organization and development expenses: they were valued at cost less accumulated depreciation calculated in proportion to the months of estimated useful life (see useful life assigned in Exhibit G). |
| Goodwill: corresponds to the difference between the total amount paid and that resulting from calculating the proportion of the capital stock acquired on the equity according to the books of Volkswagen Financial Services Compañía Financiera SA, at the date of acquisition less the corresponding accumulated amortization calculated in proportion to the estimated useful life months (see useful life assigned in Exhibit G). |
n) | Derivative transactions (see note 12) : |
| Interest rate swaps and Forward transactions: |
1. | Interest rate swaps are recorded at the value resulting from the application of rates differences to residual notional amounts at the end of the each fiscal year. |
2. | Forward transactions receivable/payable in pesos without delivery of the underlying asset are recorded for the amount receivable or payable, as appropriate, arising from the difference between the agreed exchange rate and the exchange rate at the end of each fiscal year as applied to stated notional amounts. |
| Repo and Reverse Repo transactions |
As of December 31, 2016 and 2015, the repos whose underlying assets are not subject to the volatilities published by BCRA were valued as per the cost of each transaction and the repos whose underlying assets are subject to volatility were recorded at their quoted value. Accrued premiums were charged to income (loss) for each fiscal year.
o) | Employee termination pay : |
The Bank expenses employee termination pay as disbursed.
p) | Other liabilities: |
They include the debit balances non arising out of transactions relating to the supply and demand of financial resources, plus the adjustments and interest payable accrued as of December 31, 2016 and 2015.
- 14 - |
q) | Allowance for other contingencies : |
| Claims brought by Consumer Groups: several consumer protection groups have brought claims against the Bank on behalf of consumers for undetermined amounts in connection with certain financial charges. The Bank and its legal advisors have reviewed and answered to such claims, rejecting the arguments of these consumer groups pursuant to the applicable laws and on grounds that the claims were not legitimate and were barred by the statute of limitations. Therefore, no significant adverse financial impact are expected in this regard. |
| It includes the estimated amounts to meet contingencies of probable occurrence that, if occurred, would give rise to a loss for the Bank. |
r) | Stockholders equity accounts: |
They are restated as explained in note 2.1 except for the Capital Stock and Non capitalized contributions accounts which have been kept at cost. The adjustment resulting from the restatement is included in the Adjustment to Stockholders´ Equity Adjustment to Capital Stock account.
s) | Statement of Income Accounts: |
| As of December 31, 2016 and 2015, accounts accruing monetary transactions [financial income (expense), service charge income (expense), provision for loan losses, administrative expenses, etc.] were computed on the basis of their monthly accrual at historical rates. |
| Accounts reflecting the effect on income resulting from the sale, write-off, or use of non-monetary assets were computed based on the value of such assets, as mentioned in note 2.1. |
| Income from investments in subsidiaries was computed based on such companies income adjusted as explained in note 2.1. |
t) | Earning per share: |
As of December 31, 2016 and 2015, the Bank calculated the earning per share on the basis of 536,877,850 ordinary shares of $1 par value each. The net income for each period on those dates is as follows:
12-31-2016 | 12-31-2015 | |||||||
Net income for the fiscal year |
3,643,672 | 3,784,487 | ||||||
Earning per share for the fiscal year (stated in pesos) |
6.79 | 7.05 |
u) | Use of accounting estimates : |
The preparation of the financial statements in accordance with the standards set forth by the BCRA require the Bank to use assumptions and estimates that affect certain assets such as allowances for doubtful loan and certain liabilities such as provisions for other contingencies as well as the reported amounts of income/loss during the fiscal year. Actual income/loss may differ from such estimates.
- 15 - |
3. | DIFFERENCES BETWEEN BCRA ACCOUNTING STANDARDS AND ARGENTINE PROFESSIONAL ACCOUNTING STANDARDS |
The Bank has prepared these financial statements by applying the regulations of the BCRA, which do not contemplate some of the valuation criteria established by the Argentine professional accounting standards.
The main differences between the regulations of the BCRA and the Argentine professional accounting standards are detailed below:
a) | Tax effects |
As already indicated hereinbelow, in note 4.1., the Bank has received various communications from the BCRA pursuant to which that BCRA indicates that the capitalization of items arising from the application of the deferred tax method is not allowed, In accordance with Argentine professional accounting standards, a deferred tax asset should be recognized to the extent the reversal of temporary differences generates a future decrease in the tax effectively determined. As a result, the allowances set up by the Bank in this respect, for 556,100 and 246,300 as of December 31, 2016 and 2015, respectively, should be reversed.
Moreover, the effect on the income statement of the fiscal year ended December 31, 2016 and 2015 would have been 309,800 and 6,800 (gain), respectively.
b) | Derivative financial instruments |
As explained in notes 2.3.n) and 12, as of December 31, 2016 and 2015, the Bank recorded the effects of interest rate swap agreements as established by the BCRA. Should the Bank had applied the Argentine professional accounting standards, the stockholders equity would have decreased in 33,966 and 32,906, respectively. By contrast, the effect of the application of the professional accounting standards on the income statement for the fiscal years ended December 31, 2016 and 2015 would have been 1,060 (gain) and 40,257 (loss), respectively.
4. | TAX MATTERS |
4.1. Income tax
The Bank determined the charge for income tax by applying the statutory 35% rate to taxable income estimated for fiscal year considering the effect of temporary differences between valuation of assets and liabilities for accounting purposes and their taxable bases. The Bank considered as temporary differences those that have a definitive reversal date in subsequent years.
As of December 31, 2016 and 2015, the Bank recorded 2,238,300 and 1,861,000, respectively, in the Income tax caption as the estimate of the income tax charge payable to the tax authorities for these fiscal years.
As of December 31, 2016 and 2015, the Bank has booked 1,066,172 and 467,959, respectively, in the caption Other liabilities Other Accrued Taxes as a result of having netted the income tax withholdings and other withholdings applied to the Bank until such dates.
Besides, on June 19, 2003, the Bank received a note from the BCRA indicating that the capitalization of items arising from the application of the deferred tax method is not allowed.
- 16 - |
On June 26, 2003, the Bank, based on the opinion of its legal counsel, responded the above mentioned note, indicating that in their opinion the rules of the BCRA do not prohibit the application of the deferred tax method generated by the recognition of temporary differences between the accounting and tax result, Subsequently, Resolution 118/03 of the Superintendent of Financial and Exchange Institutions received on October 7, 2003 confirmed the terms of the note dated June 19, 2003, Consequently, as from that date the Bank set up an allowance for the net balance between the deferred tax assets and liabilities.
As of December 31, 2016 and the end of the previous fiscal year, the Bank recorded under Other Receivables (in the line Tax Prepayments) a taxable deferred asset amounting 556,100 and 246,300, respectively. Such amounts are made up as follows:
12-31-2016 | 12-31-2015 | |||||||
Deferred tax assets |
911,400 | 611,500 | ||||||
Deferred tax liabilities |
(355,300 | ) | (365,200 | ) | ||||
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Net deferred assets |
556,100 | 246,300 | ||||||
Allowance |
(556,100 | ) | (246,300 | ) |
4.2. Tax on minimum presumed income
Tax on minimum presumed income (TOMPI) was established by Law Nr. 25.063 in the year ended December 31, 1998, for a ten-year term, On December 19, 2008 Law Nr. 26.426 established a one-year extension in TOMPI until December 30, 2009, In turn, Law Nr. 26.545, published in the Official Gazette on December 2, 2009 extended TOMPI for an additional ten-year period, This tax is supplementary to income tax: while the latter is levied on the taxable income for the year, TOMPI is a minimum levy determined by applying the current 1% rate on the potential income of certain productive assets, Therefore, the Banks tax obligation for each year will coincide with the highest of these taxes, The above Law provides that institutions governed by Financial Institutions Law must consider as a tax base 20% of their taxable assets, after deducting non-computable ones, However, if TOMPI exceeds income tax in a given year, the excess thereof may be computed as a payment on account of any income tax in excess of TOMPI that may occur in any of the following ten years.
In every year that net operating losses are offset, the tax benefit (the benefit of the effective rate on the net operating loss used) will be realized to the extent that income tax (net of the offsetting) equals or exceeds tax on minimum presumed income, but will be reduced by any excess of the latter over former.
On February 11, 2005, the Argentine Central Bank issued Communication A 4295 whereby it enabled, under certain rules, the accounting record of credits on Tax on Minimum Presumed Income.
As of December 31, 2016 and 2015, the Income tax assessed was higher than the TOMPI. Therefore, a provision was raised for Income tax.
4.3. Other tax issues
a) | On October 24, 2007, the Bank was notified by the Tax Bureau of the City of Buenos Aires of the commencement of a sua sponte tax assessment on a certain basis and partial in nature of the taxable income as regards turnover tax for the fiscal years 2002 and 2003, The Bank filed its defenses to the notice mentioned, which was ratified on October 6, 2008 through Resolution No. 3631-DGR 2008 containing the official assessment. |
- 17 - |
On April 28, 2009, the Court of Appeals with Federal Jurisdiction over Contentious Administrative Matters, Panel 3 handed down a judgment favourable to a petition filed by the Bank for the judge to suspend the effect of the decision made by administrative authorities until the appeal is decided. The judgment thus ordered that subject to a sworn promise to comply a) the Tax Bureau of the City of Buenos Aires must suspend the sua sponte assessment that has objected to the treatment afforded by BBVA Francés to the bonds received from the National Government in the terms of Decree Nr. 905-02 and the related foreign exchange gains/losses in all matters related to taxation for turnover tax purposes for the fiscal period 2002; b) therefore, the Tax Bureau of the City of Buenos Aires must abstain from demanding that the Bank should pay any amount due that may have arisen from the items above detailed.
Also in this respect, on May 13, 2009, an action for a declaratory judgment was commenced by the Bank against the Tax Bureau of the City of Buenos Aires, currently being heard by the court with original Federal Jurisdiction over Contentious Administrative Matters Nr. 1, to procure a judgment ascertaining that a) the bonds received by the Bank from the National Government as compensation for the asymmetric conversion into pesos of assets and liabilities imposed by the Executive Order Nr. 905/2002 may not be levied with Turnover Tax in the Autonomous City of Buenos Aires; b) the foreign exchange gains/losses are a direct effect of the modification of the monetary system and therefore should not be levied with Turnover Tax in the Autonomous City of Buenos Aires.
On December 29, 2010, the Judge presiding over the court with original Federal Jurisdiction over Contentious Administrative Matters Nr. 1 handed down a new precautionary measure,
The Bank as well as its legal and tax advisors estimate that the Bank has made a reasonable interpretation of currently applicable rules and regulations concerning the fiscal periods objected to by the Tax Bureau of the City of Buenos Aires and do not expect an adverse financial impact in these respects.
As regards the remaining balance of the amount claimed, the Bank adhered to a scheme of payment in instalments that was settled on October 4, 2010.
b) | Afterwards, on December 28, 2012, the Bank was notified of Resolution Nr. 3253-DRG-2012 whereby the Tax Bureau of the City of Buenos Aires proceeded with a sua sponte assessment based on facts concerning the taxable basis for purposes of turnover tax for the fiscal years 2004 through 2010, The Entity appealed such resolution. |
On February 3, 2015, the Bank was notified of the passage of Resolution Nr. 2014-3711-DGR, which conceded the appeal in part.
This Resolution was appealed by lodging a so-called hierarchical appeal with the head of the governmental agency in charge of raising public revenue, which was rejected, thus putting an end to the administrative stage.
For the sole purpose of being able to continue with the submission of the lawsuit, dated November 24, 2015, the Entity paid the amount claimed, which does not entail its acceptance of the claim.
The Bank as well as its legal and tax advisors estimate that the Bank has made a reasonable interpretation of currently applicable rules and regulations concerning the fiscal periods objected to by the Tax Bureau of the City of Buenos Aires and do not expect an adverse financial impact in these respects.
- 18 - |
5. | BREAKDOWN OF MAIN ITEMS AND ACCOUNTS |
The breakdown of the items included under Other accounts which exceed 20% of the total amount of each item is as follows:
12-31-2016 | 12-31-2015 | |||||||
a) LOANS |
||||||||
Loans for prefinancing and export financing |
8,486,700 | 1,530,180 | ||||||
Other fixed-rate financial loans |
2,864,825 | 1,932,979 | ||||||
Financial loans communication A 5319 |
1,936,170 | 2,039,062 | ||||||
Loans to financial entities not resident in Argentina |
1,674,658 | 85,889 | ||||||
Other |
875,931 | 812,171 | ||||||
|
|
|
|
|||||
Total |
15,838,284 | 6,397,281 | ||||||
|
|
|
|
|||||
b) INVESTMENTS IN OTHER COMPANIES |
||||||||
In controlled companies-supplementary activities |
268,871 | 212,726 | ||||||
In other non-controlled companies- unlisted |
109,981 | 59,186 | ||||||
In non-controlled companies-supplementary activities |
31,319 | 21,758 | ||||||
|
|
|
|
|||||
Total |
410,171 | 293,670 | ||||||
|
|
|
|
|||||
c) OTHER RECEIVABLES |
||||||||
Guarantee deposits |
1,120,490 | 733,597 | ||||||
Tax prepayments (1) |
615,000 | 291,378 | ||||||
Miscellaneous receivables |
549,189 | 898,164 | ||||||
Prepayments |
403,433 | 500,632 | ||||||
Loans to personnel |
174,371 | 165,655 | ||||||
Advances to personnel |
118,544 | 97,749 | ||||||
Other |
16,486 | 367 | ||||||
|
|
|
|
|||||
Total |
2,997,513 | 2,687,542 | ||||||
|
|
|
|
(1) | As of December 31, 2016 and the end of the previous fiscal year, it includes the deferred tax asset for 556,100 and 246,300, respectively (see note 4.1.) |
- 19 - |
12-31-2016 | 12-31-2015 | |||||||
d) OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS |
||||||||
Accounts payable for consumption |
4,724,388 | 3,171,773 | ||||||
Collections and other operations for the account of third parties |
1,569,700 | 1,778,719 | ||||||
Other withholdings and collections at source |
1,319,998 | 985,189 | ||||||
Money orders payable |
538,216 | 1,405,633 | ||||||
Loans received from Fondo Tecnológico Argentina (FONTAR) and Banco de Inversión y Comercio Exterior (BICE) |
369,284 | 42,526 | ||||||
Pending Banelco debit transactions |
147,393 | 143,161 | ||||||
Loans received from Interamerican Development Bank (IDB) |
17,567 | 6,983 | ||||||
Accrued commissions payable |
16,274 | 4,705 | ||||||
Social security payment orders pending settlement |
14,945 | 8,471 | ||||||
Funds raised from third parties |
13,392 | 17,800 | ||||||
Other |
51,128 | 1,122 | ||||||
|
|
|
|
|||||
Total |
8,782,285 | 7,566,082 | ||||||
|
|
|
|
|||||
e) OTHER LIABILITIES |
||||||||
Accrued taxes |
1,427,649 | 757,219 | ||||||
Miscellaneous payables |
1,245,451 | 852,051 | ||||||
Accrued salaries and payroll taxes |
960,551 | 679,117 | ||||||
Amounts collected in advance |
947,619 | 808,695 | ||||||
Other |
3,420 | 2,688 | ||||||
|
|
|
|
|||||
Total |
4,584,690 | 3,099,770 | ||||||
|
|
|
|
|||||
f) MEMORANDUM ACCOUNTS DEBIT CONTROL |
||||||||
Items in safekeeping |
117,328,633 | 84,155,242 | ||||||
Securities representative of investments in custody safekeeping on behalf of the Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine Republic |
|
101,831,865 |
|
|
25,005,318 |
|
||
Checks not yet credited |
9,756,237 | 5,385,156 | ||||||
Collections items |
1,264,327 | 538,366 | ||||||
Checks drawn on the Bank pending clearing |
1,125,465 | 666,247 | ||||||
Cash in custody on behalf of the BCRA |
920,400 | 1,009,188 | ||||||
Other |
222,730 | 202,445 | ||||||
|
|
|
|
|||||
Total |
232,449,657 | 116,961,962 | ||||||
|
|
|
|
- 20 - |
12-31-2016 | 12-31-2015 | |||||||
g) SERVICE CHARGE INCOME |
||||||||
Commissions for hiring of insurances |
632,550 | 587,985 | ||||||
Rental of safe-deposit boxes |
245,319 | 188,826 | ||||||
Commissions on debit and credit cards |
197,335 | 101,566 | ||||||
Commissions for escrow |
48,037 | 23,997 | ||||||
Commissions for transportations of values |
47,670 | 43,969 | ||||||
Commissions for capital market transactions |
36.930 | 29,730 | ||||||
Commissions for loans and guaranties |
35,219 | 33,639 | ||||||
Commissions earned by direct debt |
25,039 | 17,518 | ||||||
Postal expenses recovery |
19,291 | 15,160 | ||||||
Commissions for interbanking services |
18,076 | 12,437 | ||||||
Commissions for saving accounts |
15,680 | 5,359 | ||||||
Recovery of tax settlement expenses of residents abroad |
13,060 | 4,554 | ||||||
Commissions for salary payment |
12,508 | 10,446 | ||||||
Commissions for Francés Net Cash |
8,644 | 7,822 | ||||||
Transfer fees |
8,007 | 8,476 | ||||||
Commissions for trust management |
733 | 1,832 | ||||||
Other |
58,229 | 37,126 | ||||||
|
|
|
|
|||||
Total |
1,422,327 | 1,130,442 | ||||||
|
|
|
|
|||||
h) SERVICE CHARGE EXPENSE |
||||||||
Turn-over tax |
524,420 | 383,227 | ||||||
Insurance paid on lease transactions |
199,843 | 152,015 | ||||||
Insurance paid for life insurence |
88,332 | , | ||||||
Other |
46,827 | 24,401 | ||||||
|
|
|
|
|||||
Total |
859,422 | 559,643 | ||||||
|
|
|
|
|||||
i) OTHER INCOME |
||||||||
Deferred income tax (1) |
309,800 | 6,800 | ||||||
Income from the Credit Card Guarantee Fund |
151,343 | 64,609 | ||||||
Related parties expenses recovery |
64,820 | 59,432 | ||||||
Interest on loans to personnel |
26,751 | 28,812 | ||||||
Earning per payment orders |
18,691 | 106 | ||||||
Rentals |
2,891 | 3,045 | ||||||
Other |
114,146 | 69,717 | ||||||
|
|
|
|
|||||
Total |
688,442 | 232,521 | ||||||
|
|
|
|
(1) | Offset by the same amount recorded in the account Charge for uncollectibility of other receivable and other allowances from other expense category. |
- 21 - |
12-31-2016 | 12-31-2015 | |||||||
j) OTHER EXPENSE |
||||||||
Insurance losses |
33,540 | 19,378 | ||||||
Donations |
27,545 | 22,290 | ||||||
Turn-over tax |
17,800 | 10,141 | ||||||
Private health insurance for former employees |
17,206 | 14,541 | ||||||
Unrecoverable legal costs |
8,835 | 123 | ||||||
Charges for administrative, disciplinary and criminal penalties |
5,000 | 48,817 | ||||||
Other |
60,777 | 47,937 | ||||||
|
|
|
|
|||||
Total |
170,703 | 163,227 | ||||||
|
|
|
|
6. | PENALTIES IMPOSED ON THE BANK AND ADMINISTRATIVE PROCEEDINGS INSTITUTED BY THE BCRA |
According to the requirements of the Com. A 5689 as amended of BCRA then detailed the administrative and/or disciplinary penalties as well as the sentences imposed by criminal trial courts, enforced or brought by the Argentine Central Bank, of wich the Bank has been notified:
6.1. | Penalties enforced against the Bank |
BBVA Banco Francés S.A. over breach of Law Nr. 19,359, Administrative Proceedings for Foreign Exchange Offense investigated by the Argentine Central Bank notified on February 21, 2014 and identified under Nr. 5706, File N° 100,134/11. The charges consist in having presumably operated with foreign exchange on January 18, 2010 despite failing to make available to the Argentine Central Bank the excess in its General Foreign Exchange Position incurred on January 15, 2010, allegedly breaching Communications A 4646, A 4814 and C 37587. Accused of these breaches stand BBVA Banco Francés S.A. and the following Bank officers who served in the capacities described below at the date when the breaches were perpetrated: (i) the Director of Global Markets, (ii) the Head of the Market Management Area and (iii) the Head of the Trading Area. On October 6, 2016, the Economic Criminal Court No. 4, Secretariat No. 7 of C.A.B.A. issued a sentence which condemns the payment of a fine for the amount of 5,000 to BBVA Banco Francés S.A. and to each of the officers summarized. On October 21, 2016, the Entity lodged an appeal against the judgment and argued that the legal asset protected by the Argentine Central Bank had gone neither through an abstract danger situation nor through a specific danger situation. To date, the action is pending before the Court of Appeals in Criminal and Commercial Matters, Division A, File No.362/2016. Given that the trial prosecutor did not appeal against the currently pending action, the punishment might be either the reduction or confirmation of these sums of money for the Court of Appeals has no authority to increase the fine.
6.2. | Administrative Proceedings commenced by the BCRA |
|
Banco Francés S.A. over breach of Law Nr. 19,359, Administrative Proceedings for Foreign Exchange Offense investigated by the Argentine Central Bank notified on February 22, 2008 and identified under Nr. 3511, File 100,194/05, on grounds of a breach of the Criminal Foreign Exchange Regime of foreign currency by reason of purchases and sales of US Dollars through BCRA in excess of the authorized amounts. These total 44 transactions involving the branches 099, 342, 999 and 320. Accused of these breaches stand BBVA Banco Francés S.A. and the following Bank officers who served |
- 22 - |
in the capacities described below at the date when the breaches were perpetrated: (i) two Territory Managers, (ii) four Branch Managers, (iii) four Heads of Back-Office Management and (iv) twelve cashiers. On August 21, 2014, the trial court acquitted all the accused from all charges. The State Attorneys Office filed an appeal and the Panel A of the Appellate Court with jurisdiction over criminal and economic matters confirmed the Banks and the involved officers acquittal from all charges. The State Attorneys Office lodged an extraordinary appeal which was granted and, as of the date of these financial statements, is being heard by the Supreme Court of Justice. |
| Banco Francés S.A. over breach of Law Nr. 19,359, Administrative Proceedings for Foreign Exchange Offense investigated by the Argentine Central Bank notified on December 1, 2010 and identified under Nr. 4539, File N° 18,398/05 where charges focus on simulated foreign exchange transactions through false statements in their processing incurred by personnel from five branches in Mar del Plata, which would entail failure to comply with the client identification requirements imposed by foreign exchange rules and regulations through Communication A 3471. Paragraph 6. Accused of these breaches stand BBVA Banco Francés S.A. the five regular members of the Board of Directors and the following Bank officers who served in the capacities described below at the date when the breaches were perpetrated: (i) the Retail Bank Manager, (ii) the Territorial Manager, (iii) the Zone Manager, (iv) a Commercial Aide to the Zone Manager, (v) five Branch Managers, (vi) four Back-Office Branch Managers, (vii) five Main Cashiers and (viii) one cashier. To date, the case is being heard by Federal Court No. 3, Criminal Division, of the City of Mar del Plata, under File No. 16.377/2016. |
| BBVA Banco Francés S.A. over breach of Law Nr. 19,359, Administrative Proceedings for Foreign Exchange Offense investigated by the Argentine Central Bank notified on December 1, 2010 and identified under N., 4524, File N° 3,406/06 where charges focus on simulated foreign exchange transactions, conducted in the name of a deceased, perpetrated by personnel from the Branch 240 - Mendoza -, which would entail failure to comply with the client identification requirements imposed by foreign exchange rules and regulations through Communication A 3471, Paragraph 6. Accused of these breaches stand BBVA Banco Francés S.A., five regular members of the Board of Directors and the following Bank officers who served in the capacities described below at the date when the breaches were perpetrated: (i) the Retail Bank Manager, (ii) the Territorial Manager, (iii) the Zone Manager, (iv) the Branch Manager, (v) the Back Office Branch Manager and (vi) the Main Cashier. The period for proffering and producing evidence came to a close. The case is being heard the Federal Court N° 1, Criminal department of the city of Mendoza, File No. 23,461/2015. |
| BBVA Banco Francés S.A. Over breach of Law Nr. 19,359, Administrative Proceedings for Foreign Exchange Offense investigated by the Argentine Central Bank notified on July 26, 2013 and identified under Nr. 5406, File N° 100,443/12 where charges focus on simulated foreign exchange transactions through false statements in their processing incurred by personnel in Branch 087 - Salta -, which would entail failure to comply with the client identification requirements imposed by foreign exchange rules and regulations through Communication A 3471, Paragraph 6. Accused of these breaches stand BBVA Banco Francés S.A. and the following Bank officers who served in the capacities described below at the date when the breaches were perpetrated: (i) the Branch Manager (ii) the Back Office Management Head, (iii) the Main Cashier and (iv) two cashiers. The period for proffering and producing evidence came to a close and the Argentine Central Bank must send the file to Saltas Federal Court. |
|
BBVA Banco Francés S.A. over breach of Law No. 19,359, Administrative Proceedings for foreign exchange offense by the Argentine Central Bank, notified on December 23, 2015 and identified under No. 6666, File No. 101,027/13. The proceedings were brought for allegedly having completed operations under Code 631 Professional and technical business services from SIKA ARGENTINA S.A. against the applicable exchange regulations (Communications A 3471, A 3826 and A 5264), Allegedly, the provision of the services has not been fully evidenced. Accused of these breaches stand BBVA Banco Francés S.A. and two of the Entitys officers holding the positions described below on the |
- 23 - |
date of the charges: (i) the Foreign Trade Manager and (ii) an officer of the Area. The discovery period was declared closed by the Argentine Central Bank. To date, the case is being heard by Federal Court No. 4, Division No. 8 of the City of Buenos Aires, under file No. 1.308/2016. |
| BBVA Banco Franc é s S.A. over breach of Law No. 19,359 , Administrative Proceedings for foreign exchange offense by the Argentine Central Bank, notified on December 23, 2015 and identified under No. 6684, File No. 100,068/13. The proceedings were brought for allegedly having completed operations under Code 631 Professional and technical business services from ROCA ARGENTINA S.A. against the applicable exchange regulations (Communications A 3471, A 3826 and A 5264), Allegedly, the provision of the services has not been fully evidenced, Accused of these breaches stand BBVA Banco Francés S.A. and two of the Entitys officers holding the positions described below on the date of the charges: (i) the Foreign Trade Manager and (ii) an officer of the Area. The Argentine Central Bank has decided that the period for the production of evidence has come to an end. The case file shall be sent to the courts with jurisdiction over criminal economic matters in the city of Buenos Aires. |
The Bank and its legal advisors estimate that made a reasonable interpretation of the applicable regulations in force and do not expect an adverse financial impact on these senses.
7. | RESTRICTIONS ON ASSETS |
As of December 31, 2016 and 2015, there are Banks assets, which are restricted as follows:
a) | The Government and Private Securities account includes 227,946 in Argentine Treasury Bonds with CER adjustment in pesos maturing in 2021, as of December 31, 2016. At the end of the previous fiscal year, includes 102,590 in bonds issued by the Argentine Government in pesos maturing in 2016. They were allocated to the guarantee required to act as custodian of investment securities related to Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine Republic and Safe Keeping of bills. |
b) | The Bank appropriated 41,997 and 19,983, respectively, in Guaranteed Bonds maturing in 2020, to secure loans arranged under the Credit Global Program to micro, small and medium businesses given by the Interamerican Development Bank (IDB). |
c) | The Bank appropriated 45,717 and 253,764, respectively, in Guaranteed Bonds maturing in 2020, to secure loans granted by the so-called Bicentennial Fund. |
d) | The Bank has also appropriated accounts, deposits and trusts for 2,049,102 and 1,659,774, respectively, as security for activities related to credit card operations, automated clearing houses, non-deliverable forwards and futures and lawsuits. |
- 24 - |
8. | TRANSACTIONS WITH SUBSIDIARIES AND PARENT COMPANIES (ART, 33 OF LAW Nr. 19,550) |
The balances as of December 31, 2016 and 2015, for transactions performed with subsidiaries, associates and parent companies are as follows:
Balance Sheet | Memorandum Accounts (1) | |||||||||||||||||||||||
Assets | Liabilities | |||||||||||||||||||||||
Company |
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
BBVA |
404,352 | 2,703 | 272,941 | 268,696 | 126,657 | 85,462 | ||||||||||||||||||
BBV América S.L. |
, | , | , | 119,253 | 14,695,665 | 14,379,085 | ||||||||||||||||||
BBVA Francés Valores S.A. |
12 | 12 | 215 | 64 | 23,057 | 13,513 | ||||||||||||||||||
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) |
3 | 1 | 154 | 1,207 | 29,762 | 3,527 | ||||||||||||||||||
BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión |
1.580 | 901 | 16,843 | 17,523 | 133,902 | 100,145 | ||||||||||||||||||
BBVA Consolidar Seguros S.A. |
14,991 | 15,665 | 7,009 | 12,310 | 45,931 | 22,544 | ||||||||||||||||||
PSA Finance Argentina Cía. Financiera S.A. |
694,416 | 709,035 | 6,107 | 7,235 | 271,001 | , | ||||||||||||||||||
Volkswagen Financial Services Compañía Financiera S.A. |
1,014,120 | , | 32,847 | , | , | , | ||||||||||||||||||
Rombo Cía. Financiera S.A. |
465,463 | 1,032,918 | 10,656 | 17,407 | 816,278 | 296,300 |
(1) | Includes Items in safekeeping, Credit lines granted (unused portion) covered by debtor classification regulations, Guaranties given covered by debtor classification regulations and Derivatives. |
9. | BANK DEPOSITS GUARANTEE INSURANCE SYSTEM |
The Bank is included in the Deposit Guarantee System established by Law 24,485, Regulatory Decrees Nr. 540/95, Nr. 1292/96 and 1127/98 and BCRAs Communication A 5943.
Such law provided for the creation of the Company Seguros de Depósitos Sociedad Anónima (SEDESA) for purposes of managing the Deposit Guarantee Fund (DGF), whose shareholders, in accordance with the changes introduced by Decree Nr. 1292/96, shall be the BCRA with one share as a minimum and the trustees of the trust created by the financial institutions in the proportion to be determined for each by the BCRA according to their contributions to the DGF.
That Company was incorporated in August 1995 and the Bank holds a 8.8649% interest in its capital stock.
The Deposit Guarantee System, which is limited, compulsory and onerous, has been created for purposes of covering the bank deposit risks subsidiarily and complementarily to the deposit protection and privilege system established by the Financial Institutions Law.
The guarantee shall cover the repayment of principal disbursed plus interest accrued through the date of revoking of the authorization to operate or through the date of suspension of the institution through application of section 49 of the BCRAs Charter provided that the latter had been adopted earlier than the former without exceeding the amount of pesos a four hundred and fifty thousand, Regarding operations in the name of two or more people, the guarantee shall be prorated between the holders, In no event shall the total guarantee per person exceed the above-mentioned amount, whatever the number of accounts and/or deposits.
In addition, it is established that financial institutions were required to set aside an ordinary contribution to the deposit guarantee insurance equal to 0.015% of their monthly average of daily balances of the items detailed in said regulation.
- 25 - |
10. | TRUST ACTIVITIES |
On January 5, 2001, the BCRAs Board of Directors issued Resolution Nr. 19/2001, providing for the exclusion of Mercobank S.A.s senior liabilities under the terms of section 35 bis of the Financial Institutions Law, the authorization to transfer the excluded assets to the Bank as trustee of the Diagonal Trust, and the authorization to transfer the excluded liabilities to beneficiary banks, Also, on the mentioned date, the agreement to set up the Diagonal Trust was subscribed by Mercobank S.A. as settle and the Bank as trustee in relation to the exclusion of assets as provided in the resolution above-mentioned, As of December 31, 2016 and 2015, the assets of Diagonal Trust amount to 2,427, considering its recoverable value.
In addition, the Bank in its capacity as Trustee in the Corp Banca Trust recorded the selected assets on account of the redemption in kind of participation certificates for 4,177 as of December 31, 2016 and 2015.
In addition, the Bank acts as trustee in 12 non-financial trusts, and in no case being personally liable for the liabilities assumed in the performance of the contract obligations; such liabilities will be settled with and up to the full amount of the corpus assets and the proceeds therefrom, The non-financial trusts concerned were set up to secure the receivables of several creditors (beneficiaries) and the trustee was entrusted the management, care, preservation and custody of the corpus assets until (i) the requirements to show the noncompliance with the obligations by the debtor (settler) vis-à-vis the creditors (beneficiaries) are met, moment at which such assets will be sold and the proceeds therefrom will be distributed (net of expenses) among all beneficiaries, the remainder (if any) being delivered to the settler, or (ii) all contract terms and conditions are complied with, in which case all the corpus assets will be returned to the settler or to whom it may indicate, The trust assets represent 152,337 and 151,400 as of December 31, 2016 and 2015, respectively, and consist of cash, creditors rights, real estate and shares.
11. | CORPORATE BONDS |
On July 15, 2003, an Extraordinary Stockholders Meeting approved the setting up of a Program for the issuance and re-issuance of ordinary Corporate Bonds (non-convertible into shares) with ordinary guarantee, or such guarantees as may be decided by the Bank, and unsecured Subordinated Corporate Bonds, convertible or not into shares, During the life of the Program, which was 5 (five) years, it was possible to issue and re-issue any number of series and/or classes of Corporate Bonds as long as at all times the maximum amount in circulation after adding together all series and/or classes outstanding under the Program pending redemption does not exceed at any time US$ 300,000,000 (or the equivalent thereof in other currencies), The Program was approved by CNV Resolution Nr. 14,967 dated November 29, 2004.
The Global Program was amended according to the resolutions adopted by the Ordinary and Extraordinary Stockholders Meeting held on April 26, 2007; extended for 5 (five) years by resolution adopted by the Ordinary and Extraordinary Stockholders Meetings held on March 28, 2008 and on April 9, 2013 (approved by the CNV by Resolutions Nr. 16,010 and Nr. 17,127 dated November 6, 2008 and July 11, 2013, respectively); and the maximum amount of the issuance was successively increased from US$ 300,000,000 to US$ 500,000,000 and from US$ 500,000,000 to US$ 750,000,000 by resolution adopted by the Ordinary and Extraordinary Stockholders Meetings held on March 30, 2011 and March 26, 2012, respectively.
- 26 - |
The following is a detail of the Corporate Bonds outstanding as of December 31, 2016 and 2015:
Detail |
Date of
issuance |
Nominal Value
(in thousands of pesos) |
Due date |
Rate |
Interest payments |
|||||||||||
Class 7 |
11/08/2013 | 250,000 | 11/08/2016 |
Private Badlar + nominal 4,24% per annum |
Quarterly |
|||||||||||
Class 9 |
02/11/2014 | 145,116 | 02/11/2017 |
Private Badlar + nominal 4,70% per annum |
Quarterly |
|||||||||||
Class 10 |
07/18/2014 | 233,750 | 01/18/2016 |
Private Badlar + nominal 2,50% per annum |
Quarterly |
|||||||||||
Class 11 |
07/18/2014 | 165,900 | 07/18/2017 |
Private Badlar + nominal 3,75% per annum |
Quarterly |
|||||||||||
Class 12 |
11/13/2014 | 130,286 | 05/13/2016 |
Private Badlar + nominal 2,53% per annum |
Quarterly |
|||||||||||
Class 13 |
11/13/2014 | 107,500 | 11/13/2017 |
Private Badlar + nominal 3,75% per annum |
Quarterly |
|||||||||||
Class 15 |
02/13/2015 | 144,875 | 11/13/2016 |
Private Badlar + nominal 4% per annum |
Quarterly |
|||||||||||
Class 16 |
07/30/2015 | 204,375 | 07/30/2017 |
Private Badlar + nominal 3,75% per annum |
Quarterly |
|||||||||||
Class 17 |
12/28/2015 | 199,722 | 06/28/2017 |
Private Badlar + nominal 3,50 % per annum |
Quarterly |
|||||||||||
Class 18 |
12/28/2015 | 152,500 | 12/28/2018 |
Private Badlar + nominal 4,08 % per annum |
Quarterly |
|||||||||||
Class 19 |
08/08/2016 | 207,500 | 02/08/2018 |
Private Badlar + nominal 2,40% per annum |
Quarterly |
|||||||||||
Class 20 |
08/08/2016 | 292,500 | 08/08/2019 |
Private Badlar + nominal 3,23% per annum |
Quarterly |
|||||||||||
Class 21 |
11/18/2016 | 90,000 | 05/18/2018 |
Private Badlar + nominal 2,75% per annum |
Quarterly |
|||||||||||
Class 22 |
11/18/2016 | 181,053 | 11/18/2019 |
Private Badlar + nominal 3,50% per annum |
Quarterly |
The issued Corporate Bonds were fully subscribed and paid in and they will be fully amortized at maturity.
As provided for in the Corporate Bonds Law and the BCRA regulations, the proceeds obtained from the issuance of Classes 7, 9, 10, 11, 12, 13, 17 and 18 were applied to the reimbursement of time deposits, the proceeds from the issuance of Class 15, 19, 20, 21 and 22 were applied to the grant of working capital loans and those obtained from the issuance of Class 16 were applied to the reimbursement Corporate Bonds Class 8.
- 27 - |
As of December 31, 2016 and 2015, the outstanding principal and accrued interest amounts to 1,798,353 (in connection with Class 9, 11, 13, 16, 17, 18, 19, 20, 21 and 22 of the Corporate Bonds) and 1,799,245 (in connection with Class, 7, 9, 10, 11, 12, 13,15,16,17 and 18 of the Corporate Bonds), respectively.
12. | DERIVATIVE FINANCIAL INSTRUMENTS |
I. | Transactions as of December 31, 2016: |
a) | Interest rate swaps for 1,984,500 (Fixed Rate versus Badlar), maturing within a period not exceeding 2 years and 242,778 more than 2 years for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts. |
These transactions have been valued in accordance with the criteria described in note 2.3.n.1.) recognizing the amount of 8,136 as income for the fiscal year.
The estimated fair value of said instruments amounts to 28,167 (Liabilities), For fair value estimation purposes, the variable and fixed as yet not matured future flows are discounted, with the swap value being the difference between the current value of the future flows receivable and the current value of the future flows payable.
As of the end of the fiscal year, the above transactions were recorded under Memorandum Accounts - Debit Accounts Derivatives Interest rate swap for 2,227,278.
b) | Interest rate swap for 24,084 (Fixed Rate versus Badlar), with final maturity in September 2019, for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts. |
Said transaction was consummated as hedge for potential volatility in the cash flows arising from certain financing deals attributable to changes in the designated benchmark interest rates and it has proven to be effective hedge for the risk mentioned.
The aim pursued by risk management consists in reducing exposure to changes in cash flows arising from financing deals. Thanks to the hedge established, changes in the cash flows arising from the underlying instrument caused by changes in the benchmark interest rate would decrease as a result of having been offset with the changes in the cash flows arising from the hedge instrument.
As of the end of fiscal year the above transaction was recorded under Memorandum Accounts - Debit Accounts Derivatives Interest rate swap for 24,084.
c) | Non-deliverable forward purchase and sale transactions in foreign currency payable in Pesos, maturing within a period not exceeding 1 year, for 2,623,708 and 3,186,904, which are recorded under Memorandum Accounts - Debit Accounts - Derivatives Notional amount of non-deliverable forward transactions, and Memorandum Accounts - Credit Accounts - Derivatives Notional amount of non-deliverable forward transactions, respectively. |
These transactions have been conducted through the MAE (Mercado Abierto Electrónico) and ROFEX (Mercado a Término Rosario), with daily settlement in pesos or settlement at maturity and valued in the manner described in note 2.3.n.2.). As of the end of the fiscal year, they generated a gain of 221,078.
- 28 - |
d) | Forward sales of BCRA Bills under repurchase agreements for 64,872, which are recorded under Other liabilities from financial transactions Instruments to be received for spot and forward purchases to be settled. |
These transactions have been valued in accordance with the description in note 2.3.g) recognizing the amount of 70,390 as income for fiscal year.
e) | Forward purchases of BCRA Bills under reverse repurchase agreements for 134,027 and 1,065 of government securities, which are recorded under Other assets from financial transactions Instruments to be received for spot and forward purchases to be settled. |
These transactions have been valued in accordance with the description in note 2.3.g) recognizing the amount of 141,395 as expense for the fiscal year.
II. | Transactions as of December 31, 2015: |
(1) | Interest rate swaps for 920,053 (Fixed Rate versus Badlar), maturing within a period not exceeding 2 years for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts and interest rate swaps for 13,000 (Badlar versus Taxed Rate), maturing within a period not exceeding 1 year for which the Bank pays a fixed amount in accordance with changes in the Badlar, Encuesta rate, and receives a variable amount in accordance with changes in the Badlar, Encuesta rate. |
These transactions have been valued in accordance with the criteria described in note 2.3.n.1.) recognizing the amount of 42,621 as income for the fiscal year.
The estimated fair value of said instruments amounts to 30,988 (Liabilities). For fair value estimation purposes, the variable and fixed as yet not matured future flows are discounted, with the swap value being the difference between the current value of the future flows receivable and the current value of the future flows payable.
As of the end of the fiscal year, the above transactions were recorded under Memorandum Accounts - Debit Accounts Derivatives Interest rate swap for 933,053.
(2) | Interest rate swap for 30,315 (Fixed Rate versus Badlar), with final maturity in September 2019, for which the Bank pays a variable amount in accordance with changes in the Badlar, Encuesta rate, and receives a fixed amount based on stated notional amounts. |
Said transaction was consummated as hedge for potential volatility in the cash flows arising from certain financing deals attributable to changes in the designated benchmark interest rates and it has proven to be effective hedge for the risk mentioned.
The aim pursued by risk management consists in reducing exposure to changes in cash flows arising from financing deals. Thanks to the hedge established, changes in the cash flows arising from the underlying instrument caused by changes in the benchmark interest rate would decrease as a result of having been offset with the changes in the cash flows arising from the hedge instrument.
As of the end of the fiscal year the above transaction was recorded under Memorandum Accounts - Debit Accounts Derivatives Interest rate swap for 30,315.
- 29 - |
(3) | Non-deliverable forward purchase and sale transactions in foreign currency payable in Pesos, maturing within a period not exceeding 1 year, for 5,809,784 and 5,843,638, which are recorded under Memorandum Accounts - Debit Accounts - Derivatives Notional amount of non-deliverable forward transactions, and Memorandum Accounts - Credit Accounts - Derivatives Notional amount of non-deliverable forward transactions, respectively. |
These transactions have been concluded through the MAE (Mercado Abierto Electrónico) and ROFEX (Mercado a Término Rosario), with daily settlement in pesos or settlement at maturity and valued in the manner described in note 2.3.n.2.). As of the end of fiscal year, they generated a gain of 493,406.
(4) | The Bank does not carry any pending balances associated to repos in force at December 31, 2015. However, the transactions conducted at December 31, 2015 have yielded a 70,562 gain at the end of the fiscal year. |
(5) | The Bank does not carry any pending balances associated to reverse repos in force at December 31, 2015. However, the transactions conducted at December 31, 2015 have yielded a 43,503 loss at the end of the fiscal year. |
13. | COMPLIANCE WITH CNV REQUIREMENTS |
13.1 Minimum Stockholders Equity and Minimum of liquid assets:
According to CNVs General Resolution Nr. 622/13, the minimum Stockholders Equity required to operate as Settlement and Clearing Agent Comprehensive and Mutual Funds Custodian Agent would amount to 20,500 and the minimum of liquid assets required by those rules would be 10,250, this amount comprises National Treasury Bonds adjusted by CER due 2021 deposited with the account opened at Caja de Valores S.A. entitled Depositor 1647 Brokerage Account 5446483 BBVA Banco Francés Minimum Counterbalancing Entry. As of December 31, 2016 and 2015, the Banks Stockholders Equity exceeds the minimum amount imposed by CNV.
13.2 The Banks operations as Mutual Funds Custodian Agent
As of December 31, 2016 and 2015, in its capacity as Custodian Agent of FBA Ahorro Pesos, FBA Renta Pesos, FBA Bonos Argentina, FBA Calificado, FBA Horizonte, FBA Acciones Latinoamericanas, FBA Acciones Argentinas, FBA Renta Pesos Plus, FBA Renta Mixta and FBA Bonos Globales managed by BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión, the Bank holds certificates of deposits, repos, shares, corporate bonds, government securities, indexes, deferred payment checks, securities issued by the BCRA, Cedears, ADRS, shares in mutual funds and financial trusts in safekeeping in the amount of 16,665,210 and 7,902,234, respectively, all of which making up the Funds portfolio and booked in Memorandum Accounts - Debit Accounts -Control - Other.
- 30 - |
The Investment Funds equities are as follows:
EQUITIES AS OF
INVESTMENT FUND |
12-31-2016 | 12-31-2015 | ||||||
FBA Ahorro Pesos |
11,269,857 | 5,458,819 | ||||||
FBA Bonos Argentina |
2,793,125 | 269,797 | ||||||
FBA Renta Pesos |
2,609,965 | 2,559,447 | ||||||
FBA Calificado |
393,708 | 299,372 | ||||||
FBA Horizonte |
252,402 | 191,003 | ||||||
FBA Acciones Latinoamericanas |
101,400 | 64,063 | ||||||
FBA Acciones Argentinas |
35,594 | 3,066 | ||||||
FBA Renta Pesos Plus |
10,083 | , | ||||||
FBA Renta Mixta |
9,055 | , | ||||||
FBA Bonos Globales |
282 | 217 | ||||||
|
|
|
|
|||||
Total |
17,475,471 | 8,845,784 | ||||||
|
|
|
|
14. | EARNINGS DISTRIBUTIONS |
The Bank has in place an earnings distribution policy in line with the Banks vocation for sustained stockholder value, that at the same time allows the Banks financial condition to perform favourably so as to strive for business growth and the maintenance of consistently high liquidity and solvency standards in compliance with currently applicable rules and regulations.
Restriction on earnings distributions:
a) | In accordance with the provisions of B.C.R.A., the next Shareholders´ Meeting must appropriate the amount of 728,734 currently included under Unappropriated earnings to the Legal Reserve. |
b) | In accordance with the provisions of current regulations on Distribution of results of the Argentine Central Bank , for the purposes of calculating the balance of distributable profits be made in non-accounting deductions form of the sum of the amounts recorded in the account earnings and the discretionary reserve for future distributions results. It also must be authorized by the Superintendency of Financial and Exchange Institutions in order to verify the correct application of the method described by the same for the distribution of results. |
- 31 - |
15. | ACCOUNTS IDENTIFYING COMPLIANCE WITH MINIMUM CASH REQUIREMENTS |
The following are the items computed for Compliance with Minimum Cash Requirements according to the regulations of the BCRA, with their corresponding balances as of December 31, 2016 and 2015:
12-31-16 | 12-31-15 | |||||||
COMPUTABLE COMPLIANCE IN PESOS |
||||||||
Special Guarantee Accounts |
838,156 | 711,241 | ||||||
BCRA Checking Account |
12,233,321 | 10,023,347 | ||||||
|
|
|
|
|||||
TOTAL |
13,071,477 | 10,734,588 | ||||||
|
|
|
|
|||||
COMPUTABLE COMPLIANCE IN US DOLLARS (Stated in thousands of pesos) |
||||||||
Special Guarantee Accounts |
76,431 | 52,697 | ||||||
BCRA Checking Account |
18,836,268 | 12,460,754 | ||||||
|
|
|
|
|||||
TOTAL |
18,912,699 | 12,513,451 | ||||||
|
|
|
|
|||||
COMPUTABLE COMPLIANCE IN EUROS (Stated in thousands of pesos) |
||||||||
BCRA Checking Account |
160,628 | 75,574 | ||||||
|
|
|
|
|||||
TOTAL |
160,628 | 75,574 | ||||||
|
|
|
|
16. | STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW |
The Statements of Cash and cash equivalents flow explain the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Bank considers to be cash and cash equivalents:
12-31-15 | 12-31-15 | 12-31-14 | ||||||||||
a) Cash and due from banks |
48,070,998 | 27,942,617 | 12,525,541 | |||||||||
b) Loans to financial sector, call granted maturity date less than three months |
1,705,000 | 517,300 | 525,950 | |||||||||
|
|
|
|
|
|
|||||||
CASH AND CASH EQUIVALENTS |
49,775,998 | 28,459,917 | 13,051,491 | |||||||||
|
|
|
|
|
|
- 32 - |
Item b) is considered to be cash equivalents because they it is held in order to meet short-term commitments, they are readily convertible in known cash amounts, they are subject to insignificant risk of changes in value and their maturity is less than three months.
17. | THE BANKS DOCUMENTATION AND RECORDS CNV RESOLUTION Nr. 629/14 |
CNV issued its General Resolution Nr. 629 on August 14, 2014 to introduce changes in its own rules governing the maintenance and safekeeping of corporate books, accounting records and business documentation. In this respect, it is reported that the Bank has sent the documentation that supports its operations for the periods still open to audit for safekeeping to Administradora de Archivos S.A. (AdeA), domiciled at Ruta 36 Km, 31,5 of Florencio Varela, Province of Buenos Aires.
In addition, it is put on record that a detail of the documentation delivered for safekeeping, as well as the documentation referred to in Article 5, Sub-article a.3), Section I of Chapter V of Title II of the CNV rules is available at the Banks registered office (Technical Rules 2013 as modified).
18. | IFRS CONVERGENCE IMPLEMENTATION PLAN. |
On September 30, 2016, in compliance with the instructions given by the Argentine Central Bank through its Communication A 5844, as amended, the Entity submitted the required recognition and measurement adjustments to reconcile the balances of assets and liabilities to the balances that would arise from applying the International Financial Reporting Standards set forth in the Argentine Central Banks guidelines. The Banks Board of Directors has taken note of this report and of the progress made to date.
19. | PURCHASE OF STOCK IN VOLKSWAGEN FINANCIAL SERVICES COMPAÑIA FINANCIERA S.A. |
On May 20, 2015, the Bank executed a Stock Purchase Agreement with Grupo Volkswagen, Pursuant to this Stock Purchase Agreement, the Bank acquired 51% of the capital stock of Volkswagen Financial Services Compañía Financiera S.A., equivalent to 23,970,000 non-endorsable, registered, ordinary shares with par value $ 1 and the right to one vote per share.
On August 26, 2016, pursuant to Resolution No. 332, the Argentine Central Bank approved the transaction above mentioned. Consequently, on September 26, 2016, 51% of its capital stock was effectively transferred to BBVA Francés and the agreed-upon price, 53,040, was paid.
On September 26, 2016, Volkswagen Credit Compañía Financiera S.A.s Ordinary and Extraordinary General Shareholders Meeting adopted a unanimous resolution whereby the companys name would be changed to Volkswagen Financial Services Compañía Financiera S.A.. Such modification is authorized by B.C.R.A. and has been registered with the General Inspection of Justice on November 14, 2016 under the number 22302 of book 82 of Societies for Shares.
Additionally, and as per a resolution adopted by the Shareholders Meeting already mentioned, on October 27, 2016, BBVA Francés disbursed 229,500 as a capital increase.
20. | RISK MANAGEMENT POLICIES |
The Risk Department comprises units specializing in each class of risk (credit, financial and operational risk) that work alongside cross-sectional control units: Internal Control and Global Management.
The following is a description of the comprehensive policies and processes for identifying, assessing, controlling and mitigating all risks: credit, financial and operational.
- 33 - |
a) | Credit Risk |
The Risk Department is made up by the following divisions: Retail Banking, Enterprise and Wholesale Banking and Recoveries. Within the purview of the Retail Banking and the Enterprise and Wholesale Banking divisions, there are the areas in charge of Admission, Follow-Up and Policies and Tools. In turn, the Recoveries division includes areas specializing in severity mitigation, further split into Legal actions for debt recovery, Personalized debt recovery efforts, Special Proceedings and Policies, Tools and Follow-up.
Approvals are processed by virtue of the loan-granting powers conferred upon the positions responsible for Admission and the Risk Management Committee. In addition, the commercial areas rely on a smaller number of delegated loan-granting powers based on the amount of the transaction and on the opinion yielded by the set of evaluation tools known as SAVERF (for retail) and Rating (for wholesale). Any application that receives a study/reject opinion from any of the evaluation tools must be analyzed by the Central Admission specialists.
Any exceptions to the polices currently in force are addressed by the Risk Management Committee and/or by the Technical Committee of Local Operations.
The assessment methodology is based on internally designed scoring and rating models applied to the Retail Banking and Enterprise and Wholesale Banking portfolios management, respectively. The application of this methodology leads to the calculation of the probability of default and in addition, to a historical control over expected losses and loss given default of such losses in each portfolio. The scoring and rating tools are re-estimated periodically.
During 2016, Retail Risk put in place a new pro-active scoring system which is applied to mass campaigns targeted to customers, which resulted in improved risk differentiation and, hence, in an increase in the number and quality of the offerings.
The Bank has started to offer UVA mortgage loans pro-actively to a selection of customers, a product that gained momentum by the end of 2016, while it is being included in the automatic evaluation of product offers to clients.
The Bank has supported the boost of digital sales of credit cards by developing online evaluation engines and features to enter into loan agreements offered to its customers by Internet.
b) | Financial Risk |
Financial Risk is the unit responsible for managing Market Risk (including Counterparty Risk and Valuation Room), Structural Risks (Interest Rate and Liquidity Risks), Capital Self-Assessment and Stress scenarios.
Market Risk
The market risk is the possibility of suffering loses in the value of a portfolio as a result of adverse fluctuation in the market price.
For managing market risk, the VaR (Value at Risk) indicator is used as it is the basic unit for measuring and managing this risk in so far as it estimates the maximum expected loss with a 99% confidence level that can be seen in the market positions of a portfolio given a one-day time horizon. The volatility in risk factors used by the model is calculated using a historical 2-year window. The Market Risk model is periodically validated through back-testing.
- 34 - |
The structure of Market Risk limits establishes patterns of limits, alert and sub-limits in terms of Economic Capital (CeR, as internally known) and VaR and stress and stop loss.
The Market Risk unit manages the counterparty risk. The model estimation of credit risk in derivatives to determine not only the current exposure of each of the partners, but also the possible future development to changes in the different market variables.
Liquidity and Funding Risk
The main basic metrics used to control liquidity risk and financing include:
| Identification of liquidity risks; |
| Control and monitoring of limits, sub-limits and early alerts, based on the defined risk appetite; |
| Design of stress models and several scenarios; |
| Contingency planning. |
As part of the liquidity and financing risk control and monitoring process, below is a detail of the most relevant metrics:
| Self-funding ratio: the metrics known as Loans to Stable Customers Deposits (LtSCD) provides information about balance sheet funding structure for a given period. |
| Net short-term funding: this parameter strives toward determining reasonableness in the balance sheet funding structure. And based on that criterion, a detailed follow-up is performed of the funding sources that deviate from those considered stable by corporate criteria. |
| LCR (Liquidity Coverage Ratio): BBVA Francés fully applies and meets the requirements of this ratio as defined by Basel and incorporated by the Argentine Central Bank. |
Interest-rate risk
Balance sheet interest-rate risk management seeks to maintain BBVA Francés exposure at levels in harmony with the risk appetite validated by the Bank in the event of changes in market interest rates.
The main indicators to follow up on this type of risk are the following: a) Economic Capital per structural interest rate risk, and b) Financial margin sensitivity.
Stress Testing
Stress tests are understood to refer to the assessment of a financial position in the face of a severely adverse though possible scenario.
In this respect, stress tests are divided as per their scope of application into individual and comprehensive. Individual stress tests are aimed at measuring the impact of an adverse scenario at the individual level by risk type. Comprehensive stress tests seek to quantify impacts at the aggregate level of adverse scenarios in terms of the Balance sheet, the Income statement, any changes in cash flows and any capital requirements associated to a given projected stress situation.
Economic Capital
A financial institutions economic capital is that required to cover unexpected losses stemming from the exposures to risk that may affect the Bank.
- 35 - |
The risk profile of BBVA Francés focuses on those risks which, given their relevance, are apt to affect current or future solvency.
c) | Internal Control |
The Risk Departament, in accordance with international standards and the Argentine Central Banks requirements established by the B.C.R.A., the functions on the Validation and Internal Control/Operational Risk Management at the Country level in charge of ensuring an updated control environment that is consistent and sufficient in all of the Banks units.
The Internal Validation function is ensuring that internal risk models of the BBVA Francés are suitable for use in risk management.
Regarding the Internal Control and Operational Risk function, is based on a scheme Control Specialist and Operational Risk Managers, in the areas of business.
The Internal Control and Operational Risk Model identifies the organizations operational procedures and all the operational risks to which they are exposed. This methodology appraises each one of these risks, which are then assigned a priority and their criticality is then established for them to be managed for purposes of mitigation, if applicable.
d) | Global Management |
The area is responsible for the procedures that control the operating ratios associated to credit risk grading and diversification, provisioning, determination of risk quotas by industry segment and by type of funding.
Additionally performs the function of generating reporting for Risk Management in order to decision-making in compliance with internal credit policies and control bodies, reviewing processes and proposing alternatives.
In 2016, the Bank started to make efforts to comply with the Data Aggregation Principles (RDA), and to make the necessary changes to conform to the International Financial Reporting Standards (IFRS) issued by the IASB.
21. | TRANSPARENT CORPORATE GOVERNANCE POLICY |
I. | THE BOARD OF DIRECTORS |
The By-laws of BBVA Francés prescribe that the Bank shall be managed by a Board of Directors made up by a minimum number of three and a maximum number of nine directors, as established by the Ordinary General Shareholders Meeting when appropriate. Directors shall serve on the Board for three-year terms and they may be re-elected (the Board of Directors). The Banks Shareholders Meeting may designate alternate directors in an equal or lower number. The Board of Directors must meet at least once a month.
The proposed board membership shall be subject to a previous evaluation by the Nominations and Remunerations Committee.
- 36 - |
The table below indicates the names of the members of our Board of Directors, their present position in the company and their business background.
Name |
Current Position |
Background and Work Experience |
||
Jorge Carlos Bledel |
Chairman |
Business experience: Regular Director, Rombo Compañía Financiera S.A, Director.; Director, Credilogros Compañía Financiera S.A.; Credit Manager, Banco del Interior y Buenos Aires; Business Manager, Corporación Metropolitana de Finanzas; Financial Manager, BBVA Francés; Wholesale Banking Director, BBVA Francés, Retail Banking Director, BBVA Francés¸ Retail Banking Director, BBVA Francés; Alternate Director, Central Puerto S.A.; Regular Director, RPM Gas S.A. and Alternate Director, RPU Agropecuaria S.A.; Regular Director, RPE Distribucion S.A.; Vice-president, PB Distribucion S.A.
Jorge Carlos Bledel is an independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Alfredo Castillo Triguero | Vice Chairman 1° |
Business experience : Risk Executive Officer and Audit Executive Officer, BBVA Bancomer; Executive Vice-president of Finance, BBVA Banco Provincial de Venezuela; member of the board of directors at several companies, GrupoFinanciero BBVA Bancomer and BBVA Colombia; Executive Vice-president of Finance, BBVA Banco Ganadero de Colombia
Meets the independence criteria to be considered as an independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Marcelo Gustavo Canestri | Vice Chairman 2° |
Business experience: Vice-president, PSA Finance Argentina Cia. Financiera S.A.; Vice-president at the Board of Directors, Fundación Banco Francés; Regular Director, Rombo Compañía Financiera S.A.; Corporate Assistant Manager, BBVA Francés; Wholesale Banking Assistant Manager, BBVA Francés; Asset Management Director, BBVA Francés and Financial Director, BBVA Francés.
He is an independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Gabriel Eugenio Milstein | Regular Director |
Business experience : Director, PSA Finance Argentina Compañía Financiera S.A.; Director, Rombo Compañía Financiera S.A.; member of Banco Francés foundation; Director of Media and Director of Human Resources and Services, BBVAFrancés.
He does not meet the requirements independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Oscar Miguel Castro | Regular Director |
Business experience: Executive member, Committee of Financial Services, Pistrelli Díaz y Asoc. for twenty years. Partner in charge of the Financial Services Division in Argentina and Latin America, and member of the Financial Services Executive Committee at worldwide. Independent director, Zurich Argentina Compañía de Seguros and Zurich Compañía de Reaseguros.
He meets the requirements of an independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Juan Manuel Ballesteros Castellano | Regular Director |
Business experience: Director of Organization, Banco Bilbao Vizcaya Argentaria; Director of Human Resources, Banco Bilbao Vizcaya Argentaria.
He meets the requirements of an independent director in the terms of General Resolution Nr. 622/13 (as per its new wording dating back to 2013).
|
||
Javier Pérez Cardete | Alternate Director |
Business experience: Director of the Southern and Eastern Regions, Banco Bilbao Vizcaya Argentaria; Regional Director, Banco Bilbao Vizcaya Argentaria; Head of Risks in Valencia.
He meets the requirements of an independent director pursuant to General Resolution No. 622/13 (as revised in 2013).
|
- 37 - |
II. | SENIOR MANAGEMENT |
Senior Management is made up by the General Manager and by those executive officers who have decision-making powers and who report directly to the General Manager.
The officers in Senior Management positions must have the skills and experience required by the financial industry to run the business with which they are entrusted and to oversee as appropriate the personnel in the various areas.
III. | MANAGEMENT COMMITTEE - MEMBERSHIP |
The main members of Senior Management make up the Management Committee. The Committee is chaired by the Executive Director or General Manager.
Prospective Management Committee members shall first be evaluated by the Nominations and Remunerations Committee for subsequent consideration by the Board.
Powers
The Management Committee shall have the following powers, and, when appropriate, it shall be required to submit matters to consideration by the Board for final decision.
| Implement the strategies and policies approved by the Board. |
| Evaluate and propose business and investment strategies and general risk policies. |
| Develop the processes necessary to identify, assess, monitor and mitigate the risks to which the Bank is exposed to. |
| Implement appropriate internal control systems and monitor their effectiveness, periodically reporting to the Board on the attainment of objectives. |
| Establish business synergies with the remaining Group companies. |
| Analyze and propose the years comprehensive budget, monitor evolution and determine any corrective actions as called for by internal and market variables. |
| Propose the delegation of powers to the Banks officers. Supervise the managers in the various areas to make sure that they comply with the policies and procedures set forth by the Board. |
| Evaluate and propose Bank-wide policies, strategies and guidelines and then oversee and follow up on model implementation. |
- 38 - |
The following table identifies the members of the Management Committee and provides certain details about their business experience. The highest-ranking officers are designated for unlimited periods.
Name |
Current Position |
Background and Work Experience |
||
Martín Ezequiel Zarich |
General Manager |
Alternate Director, BBVA Banco Francés S.A.; Regular Director, BBVA Consolidar Seguros S.A.; Regular Director, BBVA Francés Valores S.A., Member of the Board of Directors, Fundación Banco Francés; Innovation and Development Director, BBVA Francés; Director of Mergers, BBVA Francés; Planning Director, BBVA Francés; Financial Director, BBVA Francés; Retail Banking Director, BBVA Francés; Director, Credilogros; Director, BBVA Francés Uruguay.; Deputy Managing Director, Commercial Development, BBVA Group; Deputy Managing Director, Business Development, BBVA Group; Economist, Banco de Crédito Argentino; Management and Budget Control Manager, Banco de Crédito Argentino; Planning Director, Management Control and Economics, Banco de Crédito Argentino.
|
||
Ignacio Sanz y Arcelus | Director, Finance and Planning. |
Finance Area Technology and Operations, BBVA; Director of the Department of Assets and Liabilities Management for Latin America, BBVA; Director of the Investment Banking Comptrollers Office (Treasury, Capital Markets, Intermediation, Corporate, Structured Financing), BBVA; Corporate Director, BBVA; Director of the Treasury, Capital Markets and International Network area, BEX Argentaria BBVA; Director of the Market Risk Audit Unit, BEX Argentaria BBVA; Director of Central Services Audit, BEX; Director of Planning, Intervention and Control, SERFINBEX; Director, BEX Argentaria BBVA; Team Leader at Arthur Andersen Auditores S.A.
|
||
Jorge Alberto Bledel |
Director, Business Development and Digital Banking |
Innovation and Business Model Manager, BBVA., Manager of Investment Products, Insurance and Capital Services, BBVA Francés; Head Portfolio Manager, BBVA Francés, Portfolio Manager, BBVA Francés; Wholesale Banking Analyst and Personal Banking Officer, BBVA Francés.
|
||
Gustavo Osvaldo Fernandez | Director, Talent and Culture |
Director of Technology and Operations, BBVA; Coordinator, Systems & Organizations, Banca Nazionale del Lavoro; Systems Coordinator, Banco Galicia; System Organization and Development Manager, Banco de Crédito Argentino; Design and Development Manager, BBVA Francés; Media Director, BBVA Francés; Director of Design and Development for the Americas, BBVA; Business Partner for the Americas, BBVA.
|
||
Carlos Elizalde | Director, Corporate & Investment Banking |
Regional Director for Global Transaction Banking LATAM, BBVA; General Manager, AL-Rajhi Bank; Free-lance Consultant, Riyadh / Buenos Aires; General Director, Citigroup Miami; Regional Chief for Latin America, Citigroup Miami; Head of Regional Sales, Citigroup Buenos Aires
|
||
Gustavo Siciliano | Director, Systems and Operations |
Director of Design and Development Technology and Operations, BBVA; Information Technology Manager - Media, BBVA; Media Director, BBVA Uruguay; Media Planning and Information Security Manager, BBVA Francés; Media Information Security Manager, Banco de Crédito Argentino.
|
||
Gerardo Fiandrino | Director, Risks |
Retail Banking Director for South America, BBVA; Director of Wholesale Banking for South America, BBVA; Retail Risk Manager, BBVA Francés; Wholesale and Enterprise Risk Manager, BBVA Francés; Admission and Follow-up Manager, BBVA Francés; Monitoring and Operation Risk Manager, BBVA Francés; Director, Rombo Compañía Financiera S.A.; Director, PSA Finance Argentina Compañía Financiera S.A.; Portfolio Monitoring Manager, Banco de Crédito Argentino. Investment Banking Senior Officer, Banco de Crédito Argentino.
|
||
Gustavo Alonso | Director, Commercial |
Retail Product Manager, BBVA Francés; Manager of Payment Services and Retail, BBVA Francés; Manager of Strategic Alliances and Products, BBVA Francés; Marketing Manager, BBVA Francés; Commercial Banking Advisor Manager, BBVA Francés; Area Manager, BBVA Francés; Branch Manager at Pilar, San Nicolás and Rosario, BBVA Francés.
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IV. | BBVA FRANCESs OWNERSHIP STRUCTURE |
The following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of December 31, 2016, by each person who, to our knowledge, owns beneficially more than 5% of our ordinary shares. These persons do not have different voting rights.
Ordinary Shares Beneficially Owned At December 31, 2016 | ||||||||
Beneficial Owner |
Number of Shares |
Percentage of Shares
Outstandings |
||||||
Banco Bilbao Vizcaya Argentaria |
244,870,968 | 45.61 | ||||||
BBV America SL (1) |
160,060,144 | 29.81 | ||||||
The Bank of New York Mellon (2) |
52,302,192 | 9.74 | ||||||
ANSES (Federal Social Security Administration) |
42,439,494 | 7.90 |
(1) | BBV América S.L. is under the control of BBVA. It has an effective 29.81% ownership interest in the capital stock of BBVA Francés. |
(2) | As holder agent of ADSs. |
V. ORGANIZATIONAL STRUCTURE
VI. | COMMITTEES OF THE BOARD OF DIRECTORS |
a) | Audit Committee Law 26,831 (C.N.V./S.E.C.) |
The Audit Committee (C.N.V./S.E.C.) BBVA Banco Frances is a collegiate body which is composed mostly of independent directors according to the criteria established in the regulations of the CNV , with a mandate to assist the Board in evaluating the role and independence of the external auditor and the exercise of the function of internal control of the Bank. The Audit
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Committee has internal rules and regulations in place that govern its purpose, organization and functions and that were approved at the General Ordinary and Special Shareholders meeting held on April 22, 2004. The Audit Committee also has a Recording Secretary who also serves as Board of Directors Secretary.
The Audit Committee is comprised by three (3) regular members of the Board of Directors to be appointed by the board by a simple majority of votes. The Board may also appoint an Alternate Member.
In the first meeting held following its designation, the Committee shall appoint a Chairman who shall call for, set the agenda of, and preside over the meetings.
The directors comprising the Audit Committee shall have knowledge on business, financial or accounting issues.
Upon the resignation, removal, death or incapacity of any member of the Audit Committee, the designated Alternate Member shall replace the outgoing regular member until the following Annual Ordinary Shareholders Meeting. The alternate member shall also have knowledge on business, financial or accounting issues and its incorporation shall not affect the majority of independent members that shall comprise the Audit Committee. The Audit Committee also meets the specifications of the Sarbanes Oxley Act.
Its main functions are:
| Giving opinion on the Board of Directors proposal for the designation of the external auditors to be retained by the company and watching for their independence status and transparency; |
| Overseeing the operation of the internal control system and the accounting and administration system, including the reliability of the latter, as well as all financial reporting and information on other significant events to be filed with the CNV and the self-regulated entities, in compliance with the applicable disclosure requirements; |
| Overseeing the application of disclosure policies on the companys risk management; |
| Providing the market with complete information on operations that entail a conflict of interest with members of the corporate bodies or controlling shareholders; |
| Giving opinion on the fairness of the compensation and stock option plans for the companys directors and managers proposed by the Board of Directors; |
| Giving opinion on the companys compliance with legal requirements and on the fairness of the terms and condition of stock or convertible security issues, upon a capital increase excluding or restricting preemptive rights; |
| Verifying compliance with the applicable code of conduct; |
| Rendering an informed opinion on transactions with related parties, where the applicable standards so require; |
| Preparing an action plan on an annual basis for the fiscal year to be reported to the Board of Directors and supervisory committee. |
b) | Nominations and Remunerations Committee |
BBVA Francés Nominations and Remunerations Committee is a non-executive body whose purpose consists in assisting the Board on matters concerning the Banks remuneration and benefit policies. Furthermore, the Nominations and Remunerations Committee is the body entrusted with the establishment of the standards and procedures governing the recruitment and training of Executive and other officers, and top-ranked personnel.
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Structure:
BBVA Francés Nominations and Remunerations Committee shall be formed by three Executive Directors any largely independent, to be designated by the Board in the same manner as the President and such individuals with executive duties as determined by the Board of Directors. The Committee shall be presided over by an Independent Director.
Each member of the Appointment and Compensation Committee shall prove sufficient knowledge on and experience in HR, compensation policies and labor risk management.
Functions:
The Appointment and Compensation Committee shall perform the following functions:
| Developing recruitment criteria for the members of the Board of Directors and senior management; |
| Identifying potential candidates to fill posts at the Board of Directors to be proposed at the General Shareholders meeting; |
| Ensuring the Training and Development of the members of the Board of Directors and senior management and other executives; |
| Establishing policies and criteria to review the performance of the main executive and the key executives; |
| Annually informing the Board of Directors of the assessment guidelines that were followed to determine the compensation level of directors, senior positions and first-line managers; |
| Ensuring that the entity has an employee incentive program in place that takes into consideration the risks undertaken by employees on behalf of the entity (both future and already assumed risks) and that adjusts incentives based on all risks; |
| Ensuring a clear link between the performance of key staff and their fixed or variable compensation, taking into account the risks undertaken and how they are managed; |
| Overseeing that the variable portion of senior managements compensation is tied to the medium and/or long-term performance of their members; |
| Administering the stock option plans; |
| Reviewing the competitive position of the Banks compensation and benefit policies and practices and approving the respective changes. To such end, these policies shall embrace the companys goals, culture and activities and shall be mainly intended to reduce incentives to undertake excessive risks in the face of the structure of the employees incentive system; |
| Defining and communicating key staff retention, promotion, dismissal and suspension policies; |
| Presenting to the Board of Directors the guidelines followed to determine the retirement plans for the Banks directors and first-line managers; |
| Regularly reporting to the Board of Directors on any action untaken and the issues discussed in the meetings; |
| Suggesting which members of the Board of Directors should comprise the several Board committees, based on their respective background; |
| Ensuring that the resumes of the Board of Directors and senior managements members are available at the Issuers web site (stating Directors term in office); |
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| Assessing the convenience of the members of the Board of Directors and/or statutory auditors performing functions at several Issuers; |
| Annually preparing, reviewing and assessing the Committees rules and regulations and proposing changes for the Boards approval; |
| Ensuring that the HR policy does not embrace any form of discrimination; |
| Ensuring that a member of the Committee is present at the General Shareholders meeting at which the Boards compensation will be approved in order to explain the Banks policy in connection with the Board of Directors and senior managements compensation. |
Organization and Operation Rules:
The Appointment and Compensation Committee shall meet as frequently as deemed necessary to perform its functions and, at least, twice per year. Meetings shall be indistinctly convened by the President or other member.
The Committee may convene individuals within the Bank that perform tasks related to the Committees functions, and may seek such external advice, through the Board of Directors, as deemed necessary to form an opinion on the matters within its competence.
The President of the Committee shall be available at the Shareholders meeting approving the Board of Directors compensation to explain the Banks policies.
c) | Internal Audit Committee (B.C.R.A.) |
According to the Argentine Central Banks regulations, the Internal Audit Committee de BBVA Banco Francés. is composed of the officials determined the board must integrate at least the same, have two members and at least one member must be an independent director. The operation of this committee shall be governed by the rules of the B.C.R.A. and by internal regulations..
The Board must use the conclusions of the internal audit timely and efficaciously and foster the internal auditors independence vis-à-vis the areas and processes controlled by said audit.
Other | Committees |
The composition and functions of the Committees that are listed below are governed by the Banks internal manuals and the applicable rules and regulations laid down by oversight agencies, the Argentine Central Bank, the Financial Information Unit, the CNV, etc.
a) | Committee for the Prevention of Money Laundering and Terrorist Financing |
This Committee is made up by: (i) BBVA Francéss Regular Director in his capacity as Regulatory Compliance Officer; (ii) Highest-ranking officer in the field of Regulatory Compliance; (iii) one Regular Director and (iv) the Officer responsible for the Prevention of Money Laundering and Terrorism Financing.
Specifically, this Committee shall be in charge of:
| Establishing guidelines and continuously reviewing the degree of progress with each action. |
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| Filing reports with the competent authorities concerning the so-called unusual or suspicious transactions, or, either, deciding to disregard them when appropriate. |
| Evaluating the potential risk of asset laundering in the new products and/or services. |
| Reaching an agreement on actions for the analysis of suspicious transactions; |
| Raising awareness in their areas about the importance of preventing asset laundering and terrorism financing. |
| Identifying any relevant situation that may occur in this regard in their respective areas; |
| Undertaking the necessary commitments within its area to put in place prevention procedures, on a coordinated basis with the Anti-Money Laundering Head. |
b) | Information Technology Committee |
This Committee is made up by a member of the Board, the Director Systems and Operations, the Technology Architecture and Infrastructure Manager, the Systems Manager and the Security, IT Risks and PMO Manager.
Specifically, this Committee shall be in charge of:
| To oversee the proper operation of the IT environment and to contribute to an improvement in its efficiency. |
| To approve the Information Technology and Systems Plan and to assess it from time to time to review degree of completion. |
| Reviewing the reports issued by the auditors in connection with the Information Technology and Systems environment and watching for the execution of corrective actions to address or minimize the identified weaknesses, taking into account their associated risks; |
| Approving physical or logic security policies and/or plans to mitigate the risk associated to the Entitys systems; |
| Maintaining timely communications with the officers of the Systems External Audit Division of the Office of the Superintendent of Financial and Exchange Entities in connection with the issues identified during the audits conducted at the entities, and with the monitoring of the actions taken to find an IT solution to such issues; |
| The Committee shall be empowered to define new review functions or areas, as deemed necessary, in order for the Entitys Information Systems to comply with overall objectives of Effectiveness, Efficiency, Confidentiality, Integrity, Availability, Reliability and Compliance. |
c) | Disclosure Committee |
This Committee is comprised by an Independent Director, the Director of the Financial and Planning Area, the Risk Director, the Legal Services Director, the Manager of the Institutional Area, the Audit Director, the Accounting and Intervention Manager, the Planning and Efficiency Manager and an Officer of Investor Relations and Analyst of Investor Relations.
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The main functions of the Disclosure Committee are to:
| Ensuring that the information relayed to the Banks shareholders, the markets where the Banks shares are listed and such markets regulatory authorities should be truthful and complete, reflect fairly the Banks financial condition and the results of operations and that it should be communicated with the formalities and within the terms mandated by applicable laws, the general principles governing market operation and good corporate governance, thus fostering the active involvement of all shareholders. |
| Ensuring that the Bank has and maintains procedures and controls concerning the preparation and content of the information disclosed in the financial statements, as well as of any accounting or financial information to be filed with the CNV and other regulators and agents of the stock exchanges where BBVA Banco Francés S.A.s shares of stock are listed; |
| Ensuring that the Bank has and maintains procedures and controls concerning the preparation and content of the information included in the 20F. |
A quorum is constituted with the absolute majority of the Committees members and decisions are made by a majority of the present members. Such individuals having expertise on the issues to be discussed at the meetings may attend them as guests, and may sign the minutes; provided, however, that the presence of such individuals shall not be taken into account for the meeting quorum and required majorities.
d) | Regulatory Compliance Committee |
This Committee is made up by three Regular Directors, the Executive Director or General Manager, the Assistant Director of Regulatory Compliance, the Commercial Director, the Finance and Planning Director and the Assistant Director of Legal Services.
Its main functions are:
| To oversee that applicable rules and regulations in matters associated to the conduct in the securities markets and the protection of personal data are complied with. |
| To oversee the scope of the Banks involvement in matters within the Committees purview, as well as the information requirements or the involvement requirements asserted by competent official organizations. |
| To make sure that the Banks internal Code of Conduct and the Code of Conduct for Interaction with Securities Markets applicable to the Banks personnel satisfy the regulatory compliance requirements and are adequate to the institution. |
| To authorize exemptions from compliance with the specific mandates of the Code of Conduct. Any such exemption shall be exceptional and warranted and it shall not pose risks to BBVA Francés and other group companies in Argentina. |
| To promote the adoption of measures that are necessary to settle matters that are ethically questionable of which any of the Committees members may become aware, as a consequence of performing the functions within their respective areas or as a consequence of having received the notices referred to in paragraph 6.28. of the Code of Conduct. |
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| With respect to those circumstances that may entail significant risks to Grupo BBVA in Argentina, the Committee must immediately notify the relevant Board of Directors of their emergence in order to make sure that the statements reflect whatever should be relevant. |
| To settle issues in which the interests of the Bank may be in conflict with the interests of the Banks clients. |
The Committee shall hold monthly meetings and shall be presided over by the President, who shall be elected among Regular Directors at the Committees first meeting. The Committee shall also have a Secretary in charge of establishing the agenda items, and preparing the minutes for each issue discussed, along with the decisions made in each case. In the absence of the President, meetings shall be presided over by the Executive Director or General Manager.
The quorum is constituted with the absolute majority of the Committees members and decisions are made by a majority of the present members.
e) | Risk Committees |
1. | Risk Management Committee |
This committee is the Entitys uttermost risk management collegiate body. It is comprised by the Chief Executive Officer or General Manager, Risk Director, Internal Control Deputy Manager, Retail Risk Manager, Enterprise and Wholesale Risk Manager (as regular members); the Financial Risk Manager ; the Recovery Manager (as optional attendants or to deal with specific matters); and the Head of the Global Management, Head of the Area of the issue under discussion and Speaker (specific attendants).
The Committees main functions are the following:
| Approving all such Clients or Business Groups operations and Financial Programs of Corporate and Investment Management in excess of the limits of authorization vested upon the Committee of Credit Risk, Financial Entities and Issuer Risk, and all such decisions made out of the local scope; all such operations that are not included in the preceding item which, due to their special or exceptional nature, should be dealt with by such committee. |
| Approving individual and corporate clients refinance transactions, settlements and charge-offs, as per the effective Delegation Rule; |
| Approving the operations of Non-Delegated Risks (risks related to media, public importance, political parties, trade unions or companies related to the Bank or its officers); |
| Define and approve the strategies, manuals, policies, practices and procedures required for identifying, evaluating, measuring and managing the risks that the Bank faces (credit risk, market risk, structural risk, liquidity risk, operational risk, etc.). |
| Approve credit policies, rating tools and new pre-approved campaigns or massive campaigns. |
| Approve asset allocation limits, PLPs and stress testing. |
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| Approve the delegation of authority (the delegation amounts shall be set and revised by the Committee), as well as the release thereof in the applicable implementing regulations to be subsequently ratified by the Board of Directors. |
| Approving portfolio selling processes and portfolio performance and the realization of assets taken as credit collateral; |
| Convening the Crisis Committee, if deemed necessary or at the request of the Wholesale or Retail Monitoring Committee, and approving the actions defined by said Committee to mitigate the risk alerts previously discussed with the respective Monitoring Committees; and |
| Such other issues not be dealt with by this Committee are expressly delegated to the Technical Committee of Local Operations. |
The Committee shall be presided over by the President (Chief Executive Officer or General Manager) and shall have a Secretary (Head of the Global Management) who, among other things, shall establish the agenda items and prepare the minutes for each issue discussed, along with the decisions made in each case. In the absence of the Chairman, his/her role shall be jointly performed by two permanent attendants (including optional attendants or attendants invited to the meeting to discuss specific issues). The Committee shall meet twice per week. If an urgent meeting is warranted, such meeting shall be convened on an extraordinary basis.
2. | Technical Committee of Local Operations |
This Committee is comprised by the Risk Director, Internal Control Deputy Manager, Retail Risk Manager, Enterprise and Wholesale Risk Manager (as regular members); the Financial Risk Manager and the Recovery Manager (as optional attendants or to deal with specific matters); and the Head of the Global Management, Head of the Area of the issue under discussion and Speaker (specific attendants).
The Committee reviews operations for up to US$ 40 million and its main functions are the following:
| Approving all such Clients or Business Groups operations and Financial Programs; |
| Approving extensions, short-term renewals and changes to short-term operations and Financial Programs and changes to Clients or Business Groups operations and Financial Programs in excess of the Wholesale Credit Risk Committees delegated authority; |
| Approving individual and corporate clients refinance transactions, settlements and charge-offs; |
| Approving renewals and extensions of pre-approved or mass campaigns. |
The Committees meetings shall be presided over by the President (Risk Director), with the attendance of a Secretary (Head of the Global Management) who, among other things, shall establish the agenda items and prepare the minutes. In the absence of the Chairman, his/her role shall be jointly performed by two permanent attendants (including optional attendantsor attendantsinvited to the meeting to discuss specific issues)
Decisions shall be made unanimously or by absolute majority with the Presidents favorable vote.
The quorum is constituted with the presence of at least two regular members (including the attendants called for to deal with specific matters) and two specific attendants.
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The Committee shall meet on a weekly basis.
f) | Corporate Assurance Committee |
This Committee is comprised by the Executive Director as President, members of the Management Committee as Regular Members, and the Committee´s Secretariat in charge of the Audit Director.
Its main functions are the following:
| Communicating and watching over the effective operation of the control model, as well as the required culture of transparency and self-criticism; |
| Ensure the implementation and conservation of the Corporate Assurance model across the entities comprising the BBVA Group. |
| Setting priorities as to the control weaknesses identified by the specialized areas and by the Internal Auditors and as to the suitability, relevance and timing of the proposed corrective measures; |
| Ensuring that specialists fulfill their responsibilities with transparency and self-criticism; |
| Being familiar with, assessing and assigning responsibilities for managing the risks submitted to its consideration; |
| Timely following up on the agreed-up risk mitigation action plans; |
| Communicating the actions taken to the specialists and Business Units; |
| Fostering the knowledge on the Operational Risk Model, as well as the dissemination of the corporate policies in that regard; |
| Addressing and making decisions regarding Operational Risk as required due to the materiality or importance of the issues involved; |
| Ensuring the application of the Operational Risk Model and facilitating the adequate management of the operational risks associated to BBVA Francés activities; |
| Overseeing the adequate deployment of the model tools and methodology; and |
| The Committee may take care of all such issues that enhance the quality and reliability of BBVA Francés and its affiliates internal controls. |
Committee shall hold ordinary and special meetings. Ordinary meetings shall be held every four months, following the required call by the Secretary. Special meetings shall be held when convened by the Secretary or at the request of one or more members of the Committee, when special circumstances so warrant.
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g) | Integrity, Market Behavior, Customer Compliance, Personal Data Protection and Regulatory Oversight Committee |
This committee is comprised by: (i) the Regular Director of BBVA Francés S.A., in its capacity as Chief Compliance Officer; (ii) the ultimate head of Regulatory Compliance; (iii) a Regular Director and (iv) the Head of Integrity, Market Conduct, Customer Compliance, Data Protection and Regulatory Oversight.
Its main functions are the following:
| Set action plans and continuously review their progress; |
| Agree upon anti-money laundering actions to be considered in cases involving employees and suppliers; |
| Foster the adoption of the necessary actions to address ethically questionable situations; |
| Adopt the necessary measures to comply with the Code of Ethical Conduct, the Capital Markets Code, and the Personal Data Protection, Customer Compliance and Regulatory Oversight regulations; |
| Foster action plans to train and raise awareness among the employees of the Bank and its affiliates about the importance of being acquainted with matters concerning Integrity, Market Conduct, Customer Compliance, Personal Data Protection, and Regulatory Oversight. |
This Committee will meet on a monthly basis.
h) | Asset & Liability Committee |
This committee is comprised by: (i) the Chief Executive Officer; (ii) the Chief Business Development and Digital Banking Officer; (iii) the Chief Financial and Planning Officer; (iv) the Chief Risk Officer; (v) the Commercial Director; (vi) the Chief Corporate & Investment Banking Officer; (vii) the Associate Director of Economic Review Services; (viii) the Planning and Efficiency Manager; (ix) the Manager of Financial Performance and Relations with Investors, and (x) the Financial Risk Manager.
Its main functions are:
| Follow up on macroeconomic variables; |
| Analyze and discuss the conditions of local and international financial markets, forecast and impact on the Banks structural risks; |
| Follow up and control on liquidity limits and alerts, rate, exchange position and market risk, both at an internal and regulatory levels. Defining corrective measures, as necessary. |
| Review historical changes in and projection of the balance sheet, deviations from the budget, and comparison against the market and the competition; |
| Follow up on the banks excess liquidity, comparison against the market and review of stress scenarios; |
| Establish the funding strategy and the allocation of resources; |
| Define the pricing policy and lending and borrowing products; |
| Follow up on the changes to the banks financial margin and its main deviations. Changes to business spreads. Analysis of the impact of management proposals. |
| Design the investment strategy and the investment of excess funds; |
| Define the strategy of investment in Public Venture Capital. |
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| Historical and projected changes to the Banks capital position and projected dividends and analyze proposals leading to the efficient use of such capital; |
| Cause financial and other analyses to be done as necessary to optimize the performance of the above items; |
| The Finance area is responsible for analyzing and following up on the proposals submitted to the committee through the applicable commissions. |
This committee will meet on a monthly basis.
VII. | BBVA FRANCÉS´S SUBSIDIARIES AND AFFILIATES |
a) | BBVA Francés Valores S.A. provides security trading services and other authorized operations to clients, either directly or through BBVA Banco Francés S.A. |
b) | BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión: the corporate purpose of this mutual fund manager is to run and manage Mutual Funds in accordance with Section 3 of Law Nr. 24,083 as subsequently amended by Law Nr. 26,831. |
c) | PSA Finance Argentina Compañía Financiera S.A. whose corporate purpose consists in financing the acquisition of new and second-hand Peugeot and Citroën vehicles through pledge loans, receivables from financial leases and other financial products and in supplying services associated to the purchase, maintenance and insurance coverage of motor vehicles. |
d) | Consolidar AFJP S.A. (undergoing liquidation proceedings), see note 3 to the Consolidated Financial Statements of BBVA Francés as of December 31, 2016. |
e) | Rombo Compañía Financiera S.A. whose corporate purpose is to finance the acquisition of new and second-hand Renault and Nissan through pledge loans, receivables from financial leases and other financial products and in supplying services associated to the purchase, maintenance and insurance coverage of motor vehicles. |
f) | BBVA Consolidar Seguros S.A.. This insurance carrier operates in the following lines of business: fire, comprehensive household insurance, civil liability, theft, personal accidents, group life insurance and other coverage. |
g) | Volkswagen Financial Services CompañíaFinanciera S.A., a company engaged in providing secured loans for the purchase of VW, Audi and Ducati new or second hand vehicles, credit through operating leases, and other financial products and services associated to the purchase, maintenance and insurance of vehicles. |
VIII. NETWORK | OF BRANCHES AND RETAIL OFFICES |
BBVA Francés operates a network of 251 branches distributed as follows: Autonomous City of Buenos Aires, 82 branches; Greater Buenos Aires, 52 branches, with the remaining 117 branches being situated in the Argentine provinces.
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IX. | INFORMATION ON BUSINESS LINES |
The most relevant business lines are: Retail Banking, whose strategy relies on building a comprehensive relationship with customers and strengthening the credit card segment; Enterprise Banking, which aims at aiding companies through both short- and long-term financing and Corporate & Investment Banking, an area concerned with Foreign Trade transactions as much as with advice in mergers and acquisitions and in capital market transactions.
X. | FINANCIAL INCENTIVES FOR PERSONNEL |
BBVA Francés has a policy in place, namely, the application of a compensation system capable of attracting and retaining the persons most adequate to each position, according to the following principles:
- | Recognize and reward, based on individual performance, the accomplishment of objectives, of team-work and the quality of the results attained, as well as the skills and competencies that each person devotes to his/her work. |
- | Ensure internal fairness through an analysis of the structure, the descriptions of the positions and the remunerations. |
- | Ensure external competitiveness by updating information in line with the reference market. |
- | Reward the contribution of tangible results. |
The remuneration system includes all other payments collected by employees as consideration for their contributions to the organization in terms of time, position and results and it is made up by the fixed remuneration system and the variable remuneration system.
For the observance of these principles, the Bank has instruments embedded in the remuneration processes that are detailed below:
- | Salary surveys into the benchmark market: the position adopted within the survey is defined in accordance with the Banks needs and strategy for each period. This benchmark market is made up by a number of companies that have similar organizational structures and business sizes. |
- | Salary categories/brackets: these are designed on the basis of the internal structure of the positions and the information derived from market salary surveys. These brackets represent salary ranges that group positions that rank similarly in terms of responsibility, experience, knowledge, etc. |
Besides, BBVA Francés uses performance assessments as a key tool to remunerate the effort and the results of each employee. At the end of each fiscal year, each head of area evaluates the objectives of their employees in order to obtain the individual performance assessment of performance for the year. Within it, we can distinguish four types of objectives: Quantitative, Customer-related, Tactical and Other.
The outcome of the assessments reflects the levels contributed by each team member and it is on this basis that the right to collect the pre-defined incentives is defined.
Cataloguing is the name ascribed in the Bank to the process whereby the employee in charge makes a global assessment of each one of his/her reportees in the performance of their current functions and whose results are used for the enforcement of certain Human Resources policies.
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Projection, in turn, is the process whereby the employee in charge makes a global assessment of each one of his/her reportees about their capabilities to discharge higher ranking functions inside the Bank. This valuation must be based on the experience, knowledge, skills and commitment of the employees.
Each employee has access to variable remuneration associated to his/her position and to the results obtained in the performance assessment. The aim is to incentivize and reward the attainment of results. The models currently in force are:
| Model of incentives to the Branch Network: these are four quarterly payments and a further payment of annual indicators. Payment is subject to the attainment of the targets fixed for each person for each period. Each position has been assigned a grid of objectives and each one of these objectives are assigned a value. |
| Model of incentives to the Central Areas, the Channels, and Support to the Branch Network: variable remuneration is assigned annually to each employee by the supervisor based on the assessment of performance-evaluation of preformance and the positions reference bonus. In addition, variables associated to the attainment of the Banks objectives in accordance with the criteria adopted by Grupo BBVA and the degree of budget compliance are assessed. These factors may have a positive or negative impact on the defined variable compensation. |
| Result-Oriented Management model of incentives: at the end of each fiscal year, each employee in this group is subject to an assessment whose score relates to the degree of objective attainment. These are renewed every year in line with the Banks strategy. The payment is determined on the basis of a benchmark bonus weighed by the individual score and adjusted on the basis of the Banks objective attainment and the degree of budget compliance. |
| Commission-based incentive model: the value of commissions depends on the unit assessment of each product based on the products contribution to the Banks results. The criteria to be applied in commission-based compensation are reviewed every year and they are paid every month in arrears. |
| Share-based payment incentive model: this is a program of incentives to directors based on the delivery of BBVA shares. The quantity of shares to be assigned is determined based on the level of responsibility of each beneficiary within the Bank. The quantity of shares finally delivered depends on the attainment of indicators and of their relevant weights. |
Besides, starting in 2012, the Bank has incorporated a new system to calculate and pay the annual variable bonus for a given group of executives whose professional activities have a material impact on the Banks risk profile.
This groups executives receive, at least, 50% of the annual variable bonus for each fiscal year in shares. The payment, both in cash and in shares is distributed as follows: 60% of the bonus is paid during the first quarter of the year and the remaining 40% is distributed in deferred thirds for up to 3 years as from the first date of payment of the variable bonus.
The shares delivered to this group of employees that are part of their annual variable bonus for the year are of restricted availability during the 6 months immediately following. The restricted availability regime applies to the net amount of the shares, that is, discounting the part necessary for the employee to pay the taxes levied on the shares received. Such restricted availability regime applicable to shares applies equally in the events of termination of the labor relationship between the employee or executive with BBVA Francés for any reason other than death and certified total labor disability in all degrees. At the expiration of the period of restricted availability, this group of BBVA Francés employees are free to transfer their shares as they see fit.
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Besides attaining the objectives laid down for such incentive, beneficiaries must remain active in the Bank as of the date of calculation and settlement, must have generated the right to collect their ordinary variable bonus for that year and they must be free from penalties for serious breaches of the Code of Conduct and other internal regulations.
XI. CODE OF CONDUCT
The Bank has a Code of Conduct that binds all of BBVA Francés employees and officers.
The Code of Conduct defines the ethical behavior that the Board of BBVA Francés considers applicable to the businesses and activities conducted by BBVA Francés and the Group companies in Argentina, builds on their foundations and lays down the guidelines required for corporate integrity to be outwardly expressed in (i) relationships with clients, employees and officers, suppliers and third parties; (ii) acting in the various markets as issuers or operators; (iii) individual actions by employees and officers; and (iv) establishing specific bodies and functions endowed with the responsibility for enforcing the Code and fostering the actions necessary to effectively safeguard corporate integrity as a whole.
XII. CONFLICTS OF INTEREST
On December 16, 2014, the Board of Directors approved the most recent version of the Rules for Preventing and Handling Conflicts of Interest at BBVA Francés and other affiliates in Argentina.
The Rule contains the following principal guidelines: (i) it determines the scope of application; (ii) it identifies conflicts of interest; (iii) it establishes the measures for preventing and handling conflicts of interest; and (iv) it provides a procedure for to be followed for interest conflict resolution.
In addition, Section 12 Standards for discharging directorship duties of the Code of Corporate Governance regulates, among other matters, transactions between Directors and the Bank or other group companies.
Basically, it mandates that any director involved shall not be in attendance when the relevant corporate bodies in which he is a member are in session to discuss the matters in which he or she might have a direct or indirect interest or which might affect persons related to him or her in the terms defined by the laws.
It also prescribes that the director involved shall refrain from entering, either directly or indirectly, into personal, professional or commercial transactions with the Bank or companies in its group, unless these transactions are subject to a procurement process that ensures transparency, with competing bids and in arms length conditions.
22. | PUBLICATION OF THE FINANCIAL STATEMENTS |
As provided by Communication A 760, the previous intervention of the BCRA is not required for the publication of these financial statements.
23. | ACCOUNTING PRINCIPLES EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH |
These financial statements are presented on the basis of the accounting standards of the BCRA and, except for the effect of the matters mentioned in note 3 to the stand alone financial statements and note 2 to the consolidated financial statements, in accordance with the Argentine professional accounting standards. Certain accounting practices applied by the Bank that conform with the standards of the BCRA and with the Argentine professional accounting standards may not conform with the generally accepted accounting principles in other countries.
- 53 - |
The effects of the differences, if any, between the accounting standards of BCRA and the generally accepted accounting principles in the countries in which the financial statements are to be used have not been quantified. Accordingly, they are not intended to present financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the countries of the users of the financial statements, other than Argentina.
- 54 - |
EXHIBIT A
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
- 55 - |
EXHIBIT A
(Contd.)
DETAIL OF GOVERNMENT AND PRIVATE SECURITIES
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
Tenencia | ||||||||||||||||||||||||
Market Value | Book balance | Book balance | ||||||||||||||||||||||
ID | of present | as of | as of | Position without | Final | |||||||||||||||||||
Description |
Caja de Valores | value | 12-31-16 | 12-31-15 | options | position | ||||||||||||||||||
INVESTMENTS IN LISTED PRIVATE SECURITIES |
|
|||||||||||||||||||||||
Other Equity instruments |
|
|||||||||||||||||||||||
Local |
||||||||||||||||||||||||
In pesos |
||||||||||||||||||||||||
Other |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Subtotal in pesos |
, | 126 | , | , | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
From abroad |
||||||||||||||||||||||||
In Foreign currency |
||||||||||||||||||||||||
Other |
49 | 49 | 49 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Subtotal in foreign currency |
49 | 48 | 49 | 49 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Subtotal Equity instruments |
49 | 174 | 49 | 49 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL INVESTMENTS IN LISTED PRIVATE SECURITIES |
|
49 | 174 | 49 | 49 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL GOVERNMENT AND PRIVATE SECURITIES |
|
12,553,470 | 14,307,011 | 12,677,605 | 12,677,605 | |||||||||||||||||||
|
|
|
|
|
|
|
|
- 56 - |
EXHIBIT B
CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES
AND GUARANTIES RECEIVED AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
COMMERCIAL PORTFOLIO |
||||||||
Normal performance |
43,398,676 | 28,048,594 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties A |
1,751,341 | 1,715,283 | ||||||
Preferred collaterals and counter guaranties B |
1,384,068 | 1,259,431 | ||||||
Without senior security or counter guaranties |
40,263,267 | 25,073,880 | ||||||
With special follow-up |
13,116 | 15,957 | ||||||
|
|
|
|
|||||
Under observation |
5,968 | 8,788 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
3,613 | 5,419 | ||||||
Without senior security or counter guaranties |
2,355 | 3,369 | ||||||
Negociations for recovery or re-financing agreements underway |
7,148 | 7,169 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
6,177 | 859 | ||||||
Without senior security or counter guaranties |
971 | 6,310 | ||||||
With problems |
17,568 | , | ||||||
|
|
|
|
|||||
Without senior security or counter guaranties |
17,568 | , | ||||||
With high risk of uncollectibility |
11,385 | 13,134 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
7,105 | 7,105 | ||||||
Without senior security or counter guaranties |
4,280 | 6,029 | ||||||
Uncollectible |
, | 5,506 | ||||||
|
|
|
|
|||||
Without senior security or counter guaranties |
, | 5,506 | ||||||
|
|
|
|
|||||
TOTAL |
43,440,745 | 28,083,191 | ||||||
|
|
|
|
- 57 - |
EXHIBIT B
(Contd.)
CLASSIFICATION OF FINANCING FACILITIES BY CATEGORIES
AND GUARANTIES RECEIVED AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
CONSUMER AND HOUSING PORTFOLIO |
||||||||
Normal performance |
36,684,989 | 31,510,894 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties A |
11,534 | 18,075 | ||||||
Preferred collaterals and counter guaranties B |
2,626,202 | 2,605,846 | ||||||
Without senior security or counter guaranties |
34,047,253 | 28,886,973 | ||||||
Low Risk |
377,474 | 211,609 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
30,814 | 20,454 | ||||||
Without senior security or counter guaranties |
346,660 | 191,155 | ||||||
Medium Risk |
350,546 | 179,566 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
9,075 | 5,444 | ||||||
Without senior security or counter guaranties |
341,471 | 174,122 | ||||||
High Risk |
188,922 | 117,743 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
16,460 | 9,293 | ||||||
Without senior security or counter guaranties |
172,462 | 108,450 | ||||||
Uncollectible |
27,707 | 26,618 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
6,609 | 9,479 | ||||||
Without senior security or counter guaranties |
21,098 | 17,139 | ||||||
Uncollectible, classified as such under regulatory requirements |
26 | 66 | ||||||
|
|
|
|
|||||
Sin garantías ni contragarantías preferidas |
26 | 66 | ||||||
|
|
|
|
|||||
TOTAL |
37,629,664 | 32,046,496 | ||||||
|
|
|
|
|||||
TOTAL GENERAL (1) |
81,070,409 | 60,129,687 | ||||||
|
|
|
|
(1) | Items included: Loans (before allowances): Other receivables from financial transactions; Unlisted corporate bonds and Other receivables by debtor classification regulations; Receivables from financial leases(before allowances); Memorandum accounts -Credit-Contingent: Credit lines granted (unused portion) covered by debtor classification regulations, Other guaranties given covered by debtor classificacition regulations and Other covered by debtor classification regulations. |
- 58 - |
EXHIBIT C
FINANCING FACILITIES CONCENTRATION
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||||||||||
Number of clients |
Outstanding
balance |
% of total
portfolio |
Outstanding
balance |
% of total
portfolio |
||||||||||||
10 largest clients |
10,211,444 | 12.60 | % | 6,522,757 | 10.85 | % | ||||||||||
50 next largest clients |
12,437,867 | 15.34 | % | 7,079,649 | 11.77 | % | ||||||||||
100 following clients |
5,849,790 | 7.22 | % | 4,428,163 | 7.36 | % | ||||||||||
Remaining clients |
52,571,308 | 64.84 | % | 42,099,118 | 70.02 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL (1) |
81,070,409 | 100.00 | % | 60,129,687 | 100.00 | % | ||||||||||
|
|
|
|
|
|
|
|
(1) | See (1) in Exhibit B. |
- 59 - |
EXHIBIT D
BREAKDOWN BY FINANCING TERMS AS OF DECEMBER 31, 2016
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
Term remaining to maturity | ||||||||||||||||||||||||||||||||
Description |
Past-due
portfolio |
1
month |
3
months |
6
months |
12
months |
24
months |
More than
24 months |
TOTAL | ||||||||||||||||||||||||
Government sector |
, | 98,819 | , | , | , | , | , | 98,819 | ||||||||||||||||||||||||
Financial sector |
, | 2,012,617 | 718,859 | 535,989 | 161,262 | 214,878 | 161,432 | 3,805,037 | ||||||||||||||||||||||||
Non financial private sector and residents abroad |
281,244 | 37,942,729 | 8,120,833 | 8,937,614 | 7,444,925 | 6,186,373 | 8,252,835 | 77,166,553 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL |
281,244 | 40,054,165 | 8,839,692 | 9,473,603 | 7,606,187 | 6,401,251 | 8,414,267 | 81,070,409 | (1) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | See (1) in Exhibit B. Anexo B. |
- 60 - |
EXHIBIT E
DETAIL OF INVESTMENTS IN OTHER COMPANIES
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos -
Information about issuer | ||||||||||||||||||||||||||||||||||||||||||||||
Concept |
Acciones | Date from | ||||||||||||||||||||||||||||||||||||||||||||
Identification |
Description |
Class |
Unit
fair Value |
Votos
per share |
Number |
Main
Business |
Period /
Fiscal year end |
Capital
stock |
Stockholder equity |
Income/
(Loss) for the period / fiscal year |
||||||||||||||||||||||||||||||||||||
AMOUNT | ||||||||||||||||||||||||||||||||||||||||||||||
12.31.16 | 12.31.15 | |||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL IN STITUTIONS, SUPPLEMENTARY AND AUTHORIZED Controlled |
||||||||||||||||||||||||||||||||||||||||||||||
Local: | miles de $ | |||||||||||||||||||||||||||||||||||||||||||||
33642192049 |
BBVA Francés Valores S.A. | Common | 500$ | 1 | 12,396 | 93,771 | 41,648 | Stockbroker | 12.31.2016 | 6,390 | 96,676 | 53,739 | ||||||||||||||||||||||||||||||||||
30663323926 |
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A.(en liquidación) | Common | 1$ | 1 | 35,425,947 | 3,253 | 10,484 |
|
Pensions
Fund Manager |
|
12.31.2016 | 65,739 | 6,037 | (8,404 | ) | |||||||||||||||||||||||||||||||
30707847367 |
PSA Finance Arg.Cía. Financiera S.A. |
Common | 1000$ | 1 | 26,089 | 352,404 | 327,554 |
|
Financial
Institutions |
|
12.31.2016 | 52,178 | 704,808 | 229,700 | ||||||||||||||||||||||||||||||||
30548590163 |
BBVA Francés Asset Management S.A. Sociedad | |||||||||||||||||||||||||||||||||||||||||||||
Gerente de Fondos Comunes de Inversión | Common | 1$ | 1 | 230,398 | 171,847 | 160,594 |
|
Investment
Fund Manager |
|
12.31.2016 | 243 | 227,113 | 114,021 | |||||||||||||||||||||||||||||||||
33707124909 |
Rombo Cía. Financiera S.A. | Common | 1000$ | 1 | 24,000 | 295,599 | 246,842 |
|
Financial
Institutions |
|
12.31.2016 | 60,000 | 738,997 | 121,893 | ||||||||||||||||||||||||||||||||
30682419578 |
Volkswagen FinancialServices Cía. Financiera S.A. | Common | 1$ | 1 | 23,970,000 | 272,389 | , |
|
Financial
Institutions |
|
12.31.2016 | 497,000 | 534,096 | 1,258 | ||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Subtotal
Controlled |
|
1,189,263 | 787,122 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
Non Controlled | ||||||||||||||||||||||||||||||||||||||||||||||
Local: | ||||||||||||||||||||||||||||||||||||||||||||||
30598910045 |
Prisma Medios de Pago S.A. (1) | Common | 1$ | 1 | 1,571,996 | 20,514 | 14,206 |
|
Services to
companies |
|
12.31.2015 | 15,000 | 436,525 | 300,971 | ||||||||||||||||||||||||||||||||
30690783521 |
Interbanking S.A. | Common | 1$ | 1 | 149,556 | 10,581 | 7,304 | Services | 12.31.2015 | 1,346 | 383,370 | 317,632 | ||||||||||||||||||||||||||||||||||
Otras | 224 | 248 | ||||||||||||||||||||||||||||||||||||||||||||
Foreign: | ||||||||||||||||||||||||||||||||||||||||||||||
30710156561 |
Banco Latinoamericano de Comercio Exterior S.A. |
|
Common
B |
|
87$ | 1 | 20,221 | 3,990 | 3,273 |
|
Banking
Institutions |
|
12.31.2015 | 3,641,140 | 12,639,963 | 1,352,312 | ||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Subtotal
noncontrolled |
|
35,309 | 25,031 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Total in financial
intitutions, |
|
||||||||||||||||||||||||||||||||||||||||||||
|
Supplementary
and authorized |
|
1,224,572 | 812,153 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
IN OTHER COMPANIES | ||||||||||||||||||||||||||||||||||||||||||||||
Non Controlled | ||||||||||||||||||||||||||||||||||||||||||||||
Local: | ||||||||||||||||||||||||||||||||||||||||||||||
30500064230 |
BBVA Consolidar Seguros S.A. | Common | 1$ | 1 | 1,301,847 | 109,782 | 59,023 | Insurance | 12.31.2016 | 10,651 | 898,417 | 323,125 | ||||||||||||||||||||||||||||||||||
Foreign: | ||||||||||||||||||||||||||||||||||||||||||||||
17BE1002 |
S.W.I.F.T. S.C.R.L. | Common | 1759$ | 1 | 4 | 199 | 163 |
|
Financial
messenger Institutions |
|
12.31.2015 | 193,877 | 5,456,795 | 274,306 | ||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Subtotal non-
controlled |
|
109,981 | 59,186 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Total in other
companies |
|
109,981 | 59,186 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
TOTAL
INVESTMENTS |
|
||||||||||||||||||||||||||||||||||||||||||||
|
IN OTHER
COMPANIES |
|
1,334,553 | 871,339 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
(1) Refers to a irregular seven-month fiscal period, ended december 31, 2015,
- 61 - |
EXHIBIT F
MOVEMENT OF PREMISES AND EQUIPMENT AND OTHER ASSETS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
- Stated in thousands of pesos-
- 62 - |
EXHIBIT G
MOVEMENT OF INTANGIBLE ASSETS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
Amortization for the fiscal year | ||||||||||||||||||||||||
Description |
Net book
beginning of fiscal year |
Additions |
Years of useful life |
Amount |
Net book value at 12-31 2016 |
Valor residual at 12-31-2015 |
||||||||||||||||||
Goodwill |
, | 3,596 | 10 | 120 | 3,476 | , | ||||||||||||||||||
Organization and development expenses (1) |
236,598 | 153,889 | 1 y 5 | 78,326 | 312,161 | 236,598 | ||||||||||||||||||
Organization and non - deductible expenses |
, | 7,923 | , | 7,923 | , | , | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
236,598 | 165,408 | 86,369 | 315,637 | 236,598 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) This caption mainly includes costs from information technology projects and lease hold improvements.
- 63 - |
EXHIBIT H
CONCENTRATION OF DEPOSITS
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||||||||||
Number of clients |
Outstanding
balance |
% of total
portfolio |
Outstanding
balance |
% of total
portfolio |
||||||||||||
10 largest clients |
4,048,094 | 3.53 | % | 8,232,045 | 10.72 | % | ||||||||||
50 next largest clients |
6,503,517 | 5.67 | % | 6,314,531 | 8.22 | % | ||||||||||
100 following clients |
4,508,402 | 3.93 | % | 3,484,729 | 4.54 | % | ||||||||||
Remaining clients |
99,592,092 | 86.87 | % | 58,761,158 | 76.52 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
114,652,105 | 100.00 | % | 76,792,463 | 100.00 | % | ||||||||||
|
|
|
|
|
|
|
|
- 64 - |
EXHIBIT I
BREAKDOWN OF MATURITY TERMS OF DEPOSITS AND OTHER LIABILITIES
FROM FINANCIAL TRANSACTIONS
AS OF DECEMBER 31, 2016
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
Plazos que restan para su vencimiento | ||||||||||||||||||||||||||||
Descriptions |
1
month |
3
months |
6
months |
12
months |
24
months |
More than
24 months |
TOTAL | |||||||||||||||||||||
Deposits |
102,960,895 | 8,528,541 | 2,596,202 | 388,580 | 177,776 | 111 | 114,652,105 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other liabilities from financial transactions |
||||||||||||||||||||||||||||
Argentine Central Bank |
12,135 | 4,038 | 6,168 | 8,307 | 1,322 | , | 31,970 | |||||||||||||||||||||
Banks and international institutions |
375,756 | 94,842 | 152,565 | 18,411 | , | , | 641,574 | |||||||||||||||||||||
Financing received from local financial institutions |
17,127 | 180,176 | 199,722 | 477,775 | 450,000 | 473,553 | 1,798,353 | |||||||||||||||||||||
Others |
8,449,411 | 68,245 | 104,235 | 140,396 | 22,338 | , | 8,784,625 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total O.L.F.T. |
8,854,429 | 347,301 | 462,690 | 644,889 | 473,660 | 473,553 | 11,256,522 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
111,815,324 | 8,875,842 | 3,058,892 | 1,033,469 | 651,436 | 473,664 | 125,908,627 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 65 - |
EXHIBIT J
MOVEMENT OF ALLOWANCES
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
- Stated in thousands of pesos-
(1) | Recorded in compliance with the provisions of Communitions A 3918, as supplemented, of BCRA, taking into account note 2.3.f.). |
(2) | Includes mainly the potential loans risk arising booked as Miscellaneous receivables relating to the petitions for the protection of constitutional rights (Amparos) paid and deferred tax asset (see note 4.1). |
(3) | Recorded to cover the estimated impairment in A.I.G. Latin American Funds equity. |
(4) | Recorded to cover contingencies that were not considered in other accounts (court orders corresponding to petitions for protection of civil rights, labor, commercial and other law suits). (see note 2.3.p) |
(5) | Recorded in compliance with the provisions of Communication A 4084 of the BCRA. |
(6) | See note nota 6.1. |
(7) | Includes exchange differences generated as allowances in foreign currency, booked in the Financial income - Gold and foreing currency exchange difference account, as follow: |
Government securities |
1 | |||
Loans |
14,661 | |||
Other receivables from financial transactions |
24 | |||
Other receivables |
7,517 |
- 66 - |
EXHIBIT K
CAPITAL STRUCTURE AS OF DECEMBER 31, 2016
(Translation of financial statements originally issued in Spanish - See note 23)
- Stated in thousands of pesos -
SHARES |
CAPITAL STOCK | |||||||||||||||||||||
Issued | ||||||||||||||||||||||
Class |
Quantify |
Votes
per share |
Outstanding | In portfolio |
Pending
issuance or dsitribution |
Paid in | ||||||||||||||||
Common |
536,877,850 | 1 | 536,833 | , | 45 | (1) | 536,878 | (2) |
(1) | Shares issued and available to stockholders but not as yet withdrawn. |
(2) | Fully registered with the Public Registry of Commerce (See note 1.2.) |
- 67 - |
EXHIBIT L
FOREIGN CURRENCY BALANCES AS OF
DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
- 68 - |
EXHIBIT N
ASSISTANCE TO RELATED AND AFFILIATES
AS OF DECEMBER 31. 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
Status | ||||||||||||||||||||||||||||||||||||||||
Concept |
Normal |
With
special follow-up / Low Risk |
With problems /
Medium Risk |
With high risk
of uncollectibility / High Risk |
Uncollectible |
Clasified
uncollectible as such under regulatory requirement |
TOTAL (1) | |||||||||||||||||||||||||||||||||
Not yet
matured |
Past-due |
Not yet
matured |
Past-due | 12.31.16 | 12.31.15 | |||||||||||||||||||||||||||||||||||
1. Loans |
2,289,886 | , | , | , | , | , | , | , | 2,289,886 | 1,718,350 | ||||||||||||||||||||||||||||||
- Overdraft |
915 | , | , | , | , | , | , | , | 915 | 2,171 | ||||||||||||||||||||||||||||||
Without senior or counter guaranty |
915 | , | , | , | , | , | , | , | 915 | 2,171 | ||||||||||||||||||||||||||||||
- Discounted Instruments |
1,560 | , | , | , | , | , | , | , | 1,560 | 553 | ||||||||||||||||||||||||||||||
Without senior or counter guaranty |
1,560 | , | , | , | , | , | , | , | 1,560 | 553 | ||||||||||||||||||||||||||||||
- Real Estate Mortgage and Collateral Loans |
3,343 | , | , | , | , | , | , | , | 3,343 | 3,519 | ||||||||||||||||||||||||||||||
Other collaterals and counter guaranty B |
3,343 | , | , | , | , | , | , | , | 3,343 | 3,519 | ||||||||||||||||||||||||||||||
- Consumer |
1,989 | , | , | , | , | , | , | , | 1,989 | 3,222 | ||||||||||||||||||||||||||||||
Without senior or counter guaranty |
1,989 | , | , | , | , | , | , | , | 1,989 | 3,222 | ||||||||||||||||||||||||||||||
- Credit Cards |
10,586 | , | , | , | , | , | , | , | 10,586 | 7,251 | ||||||||||||||||||||||||||||||
Without senior or counter guaranty |
10,586 | , | , | , | , | , | , | , | 10,586 | 7,251 | ||||||||||||||||||||||||||||||
- Others |
2,271,493 | , | , | , | , | , | , | , | 2,271,493 | 1,701,634 | ||||||||||||||||||||||||||||||
Without senior or counter guaranty |
2,271,493 | , | , | , | , | , | , | , | 2,271,493 | 1,701,634 | ||||||||||||||||||||||||||||||
2. Others receivables from financial transactions |
35,324 | , | , | , | , | , | , | , | 35,324 | 45,560 | ||||||||||||||||||||||||||||||
3. Receivables from financial leases and other |
404 | , | , | , | , | , | , | , | 404 | 509 | ||||||||||||||||||||||||||||||
4. Contingent commitments |
112,638 | , | , | , | , | , | , | , | 112,638 | 81,246 | ||||||||||||||||||||||||||||||
5. Investments in other companies and private securities |
1,301,479 | , | , | , | , | , | , | , | 1,301,479 | 825,972 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
TOTAL |
3,739,731 | , | , | , | , | , | , | , | 3,739,731 | 2,671,637 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
TOTAL ALLOWANCES
|
|
19,433
|
|
, | , | , | , | , | , | , | 19,433 | 17,644 |
(1) | Maximun amount granted to related clients during December ,2016 and 2015, respectively, according to BCRA rules. |
- 69 - |
EXHIBIT O
FINANCIAL DERIVATIVES INSTRUMENTS
AS OF DECEMBER 31, 2016
(Translation of financial statements originally issued in Spanish - See note 21)
-Stated in thousands of pesos-
Type of
|
Purpose of transactions |
Underlying asset |
Type of settlement |
Traded at /
|
Weighted
average term as originaly agreed (months) |
Weighted
average residual term (months) |
Weighted
verage term for difference settlemets (days) |
Amount | ||||||||||||||||
SWAPS |
Financial transactions -own count | | Upon expiration of differences | RESIDENTS IN ARGENTINA- | ||||||||||||||||||||
FINANCIAL SECTOR | 23 | 18 | 39 | 2,227,278 | ||||||||||||||||||||
SWAPS |
Interest rate hedge | | Upon expiration of differences | RESIDENTS IN ARGENTINA- | ||||||||||||||||||||
NON-FINANCIAL SECTOR | 122 | 33 | 7 | 24,084 | ||||||||||||||||||||
FUTURES |
Financial transactions -own count | Foreign currency | Daily of differences | MAE | 3 | 2 | 1 | 1,765,915 | ||||||||||||||||
FUTURES |
Financial transactions -own count | Foreign currency | Daily of differences | ROFEX | 2 | 1 | 1 | 631,359 | ||||||||||||||||
FUTURES | Financial transactions -own count |
Foreign currency |
Upon expiration of differences | RESIDENTS IN ARGENTINA- | ||||||||||||||||||||
NON-FINANCIAL SECTOR | 2 | 1 | 73 | 3,413,338 | ||||||||||||||||||||
REPOS |
Financial transactions -own count | National Public Securities | Upon expiration of differences | FINANCIAL SECTOR | 1 | 1 | 1 | 1,065 | ||||||||||||||||
REPOS | Financial transactions -own count | Others | Upon expiration of differences | RESIDENTS IN ARGENTINA- | ||||||||||||||||||||
FINANCIAL SECTOR | 1 | 1 | 1 | 198,899 | ||||||||||||||||||||
TOTAL |
8,261,938 |
- 70 - |
CONSOLIDATED BALANCE SHEETS AS OF
DECEMBER 31, 2016 AND 2015
(Art. 33 of Law no. 19.550)
(Translation of financial statements originally issued in Spanish - See note 23)
Stated in thousands of pesos
- 71 - |
- 72 - |
(Cont.)
- 73 - |
MEMORANDUM ACCOUNTS
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
DEBIT ACCOUNTS |
||||||||
Contingent |
||||||||
Guaranties received |
26,909,908 | 18,986,357 | ||||||
Contra contingent debit accounts |
1,104,103 | 1,558,329 | ||||||
|
|
|
|
|||||
28,014,011 | 20,544,686 | |||||||
|
|
|
|
|||||
Control |
||||||||
Receivables classified as irrecoverable |
858,775 | 709,948 | ||||||
Other (Note 7.g.) |
234,030,247 | 116,961,972 | ||||||
Contra control debit accounts |
1,686,184 | 2,524,692 | ||||||
|
|
|
|
|||||
236,575,206 | 120,196,612 | |||||||
|
|
|
|
|||||
Derivatives |
||||||||
Notional amount of non-deliverable forward transactions |
2,623,708 | 5,876,854 | ||||||
Interest rate swap |
1,980,362 | 963,368 | ||||||
Contra derivatives debit accounts |
3,186,904 | 5,843,638 | ||||||
|
|
|
|
|||||
7,790,974 | 12,683,860 | |||||||
|
|
|
|
|||||
|
|
|
|
|||||
TOTAL |
272,380,191 | 153,425,158 | ||||||
|
|
|
|
|||||
CREDIT ACCOUNTS |
||||||||
Contingent |
||||||||
Credit lines granted (unused portion) covered by debtor classification regulations (Exhibit I) |
176,296 | 327,251 | ||||||
Guaranties provided to the BCRA |
227,946 | 102,603 | ||||||
Other guaranties given covered by debtor classification regulations (Exhibit I) |
264,058 | 342,972 | ||||||
Other guaranties given non covered by debtor classification regulations |
87,776 | 273,808 | ||||||
Other covered by debtor classification regulations (Exhibit I) |
348,027 | 511,695 | ||||||
Contra contingent credit accounts |
26,909,908 | 18,986,357 | ||||||
|
|
|
|
|||||
28,014,011 | 20,544,686 | |||||||
|
|
|
|
|||||
Control |
||||||||
Items to be credited |
1,436,763 | 1,369,765 | ||||||
Other |
249,421 | 1,154,927 | ||||||
Contra control credit accounts |
234,889,022 | 117,671,920 | ||||||
|
|
|
|
|||||
236,575,206 | 120,196,612 | |||||||
|
|
|
|
|||||
Derivatives |
||||||||
Notional amount of non-deliverable forward transactions |
3,186,904 | 5,843,638 | ||||||
Contra credit derivatives accounts |
4,604,070 | 6,840,222 | ||||||
|
|
|
|
|||||
7,790,974 | 12,683,860 | |||||||
|
|
|
|
|||||
|
|
|
|
|||||
TOTAL |
272,380,191 | 153,425,158 | ||||||
|
|
|
|
The accompanying notes through to 7 to the consolidated financial statements with subsidiaries and the Exhibit I are an integral part of these statements, which in turn are part of the stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.
- 74 - |
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Art. 33 - Law No.19.550)
(Translation of financial statements originally issued in Spanish - See note 23)
- 75 - |
The accompanying notes 1through to 7 to the consolidated financial statements with subsidiaries and the Exhibit I are an integral part of these statements, which in turn are part of the stand-alone Financial Statements of BBVA Banco Francés S.A. and are to be read in conjunction therewith.
- 76 - |
CONSOLIDATED STATEMENTS OF CASH AND CASH EQUIVALENTS FLOW
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
(1) | See note 6 Statements of cash and cash equivalents flow. |
- 77 - |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
WITH SUBSIDIARIES AS OF DECEMBER 31, 2016 AND 2015
(Art. 33 of Law Nr. 19,550)
-Stated in thousands of pesos-
1. | SIGNIFICANT ACCOUNTING POLICIES AND SUBSIDIARIES |
General rule
In accordance with the procedures set forth in BCRAs regulations and Technical Pronouncement No. 21 of the Argentine Federation of Professional Councils in Economic Sciences, BBVA Banco Francés S.A. (hereinafter indistinctly referred to as either BBVA Francés or the Bank) has consolidated - line by line its balance sheets as of December 31, 2016 and 2015, as per the following detail:
| As of December 31, 2016: |
a) | With the financial statements of BBVA Francés Valores S.A., PSA Finance Argentina Cía. Financiera S.A. and BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión for the fiscal year ended December 31, 2016. |
b) | With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) for the six month periods ended December 31, 2016. |
c) | With the financial statements of Volkswagen Financial Services Compañía Financiera S.A. as of December 31, 2016. Given that this Company was acquired on September 26, 2016, the income/(loss) and the changes in cash flows were consolidated only in the period beginning on September 26, 2016 and ending on December 31, 2016. |
| As of December 31, 2015: |
a) | With the financial statements of BBVA Francés Valores S.A., PSA Finance Argentina Cía, Financiera S.A. and BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión for the fiscal year ended December 31, 2015. |
b) | With the financial statements of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) for the six month period ended December 31, 2015. |
The results and cash and cash equivalents flow of Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) have been adjusted for purposes of comparison of the fiscal years of companies consolidating on the basis of a twelve period ended on December 31, 2016 and 2015.
- 78 - |
Interests in subsidiaries as of December 31, 2016 and 2015 are listed below:
Shares | Interest percentage in | |||||||||||||||||||||||||
Type | Quantity | Total Capital | Possible Votes | |||||||||||||||||||||||
Companies |
12-31-2016 | 12-31-2015 | 12-31-2016 | 12-31-2015 | 12-31-2016 | 12-31-2015 | ||||||||||||||||||||
BBVA Francés Valores S.A. |
Common | 12,396 | 12,396 | 96,9953 | 96,9953 | 96,9953 | 96,9953 | |||||||||||||||||||
Consolidar AFJP S.A. (undergoing liquidation proceedings) |
Common | 35,425,947 | 35,425,947 | 53,8892 | 53,8892 | 53,8892 | 53,8892 | |||||||||||||||||||
PSA Finance Argentina Cía Financiera S.A. |
Common | 26,089 | 26,089 | 50,0000 | 50,0000 | 50,0000 | 50,0000 | |||||||||||||||||||
Volkswagen Financial Services Compañía Financiera S.A. |
Common | 23,970,000 | , | 51,0000 | , | 51,0000 | , | |||||||||||||||||||
BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión (1) |
Common | 230,398 | 230,398 | 95,0000 | 95,0000 | 95,0000 | 95,0000 |
(1) | The Bank holds a direct stake of 95 % of capital of the Company and an indirect interest of 4.8498 % through BBVA Francés Valores S.A. |
Total assets, liabilities, stockholders equity and net income in accordance with the criteria defined in note 2 below, as of December 31, 2016 and 2015, are listed below. In the case of Volkswagen Financial Services Compañía Financiera SA, the results correspond to the period between September 26 and December 31, 2016 are listed below:
Assets | Liabilities | Stockholders Equity |
Net income/
gain-(loss) |
|||||||||||||||||||||||||||||
Companies |
12-31-2016 | 12-31-2015 | 12-31-2016 | 12-31-2015 | 12-31-2016 | 12-31-2015 | 12-31-2016 | 12-31-2015 | ||||||||||||||||||||||||
BBVA Francés Valores S.A. |
98,892 | 44,205 | 2,216 | 1,268 | 96,676 | 42,937 | 53,739 | 16,948 | ||||||||||||||||||||||||
Consolidar AFJP S.A. (undergoing liquidation proceedings) |
40,576 | 55,476 | 34,539 | 36,022 | 6,037 | 19,454 | (13,417 | ) | 10,935 | |||||||||||||||||||||||
Volkswagen Financial Services Compañía Financiera S.A. |
1,826,091 | , | 1,291,995 | , | 534,096 | , | (12,849 | ) | , | |||||||||||||||||||||||
PSA Finance Argentina Cía. Financiera S.A. |
3,160,749 | 2,360,339 | 2,455,941 | 1,705,231 | 704,808 | 655,108 | 229,700 | 260,780 | ||||||||||||||||||||||||
BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión |
265,302 | 238,189 | 38,189 | 25,095 | 227,113 | 213,092 | 114,021 | 84,169 |
2. | VALUATION METHODS |
The financial statements of the subsidiaries have been prepared based on similar methods to those applied by the Bank for preparing its own financial statements, in connection with assets and liabilities valuation, income measurement and restatement procedure as explained in note 2 to the stand-alone financial statements of the Bank. The following are the main differences with the Argentine professional accounting standards:
Arising from the application of the accounting standards laid down by BCRA and the Argentine professional accounting standards:
|
PSA Finance Argentina Cía, Financiera S.A. assesses its income tax liability applying the effective tax rate to the estimated taxable income, without considering the effect of temporary differences between the valuation of assets and liabilities for accounting and tax purposes. In accordance with Argentine professional accounting standards, a deferred tax asset should be recognized where the reversal of temporary differences will |
- 79 - |
result in a future decrease in the assessed tax liability. In addition, unused tax losses or tax credits deductible from future taxable income should be recognized as deferred assets, to the extent their recoverability is likely. Should this criterion have been applied, shareholders equity disclosed in the consolidated financial statements would have been increased by 14,007 and 8,021 as of December 31, 2016 and 2015, respectively. |
In the case of Volkswagen Financial Services Compañía Financiera S.A., shareholders equity disclosed in the consolidated financial statements would have been increased by 3,445 as of December 31, 2016.
| The commissions paid by PSA Finance Argentina Cía. Financiera S.A. to dealers for granting financing to companies and to the public in general in connection with purchases and sales of automobiles, which in accordance with the rules established by the BCRA are charged up front to the Income Statement, should be accrued throughout the duration of the loans generated by said dealers in accordance with Argentine professional accounting standards, Had this criterion been applied, shareholders equity would have been increased by 4,711 and 3,764 as of December 31, 2016 and 2015, respectively. |
3. | REFORM OF THE INTEGRATED RETIREMENT AND PENSION SYSTEM |
Law Nr. 26,425- Dissolution and liquidation of Consolidar AFJP S.A.:
Law Nr. 26,425, which came into force on December 4, 2008, mandated that the capitalization system that used to be an integral part of the Integrated Retirement and Pension System was to be suppressed and replaced by a single pay-as-you-go system that is now known as the Argentine Integrated Social Security System (SIPA), As a consequence, Consolidar AFJP S.A. ceased to manage the funds held in the individual capitalization accounts opened by the members and beneficiaries of the Integrated Retirement and Pension System, Said funds were transferred to the Fund to Guarantee the Sustainability of the State-run Social Security System exactly as they had been invested and it is now the Argentine Social Security Authority (ANSES) the only and sole holder of said assets and funds.
Besides, on October 29, 2009, ANSES issued its Resolution Nr. 290/2009 whereby it granted a term of 30 working days to the pension fund managers that could be interested in re-converting their corporate purpose in order to manage the funds held as voluntary term deposits and as agreed-upon deposits in capitalization accounts for them to express their decision to do so.
Given the above situation and the inability of Consolidar AFJP S.A. to attain the corporate purpose and conduct the business for which it had been formed, on December 28, 2009, its Extraordinary General Unanimous Shareholders Meeting adopted the resolution to dissolve and subsequently liquidate Consolidar AFJP S.A. effective as of December 31, 2009 on the understanding that such will be the best alternative to safeguard the interests of both the creditors and the shareholders of the Company. In addition, as set forth in the Argentine Companies Law, the Shareholders Meeting decided to appoint Accountant Mr, Gabriel Orden and Mr. Rubén Lamandia to act as liquidators of Consolidar AFJP S.A. As of December 31, 2009 these gentlemen have been designated as the Companys legal representatives. As of the date of issuance of these financial statements, they are moving forward with all the actions necessary to proceed with the liquidation of Consolidar AFJP S.A.
On January 28, 2010, the dissolution of Consolidar AFJP S.A. as well as the list of designated liquidators were registered with the Supervisory Board of Companies (IGJ).
- 80 - |
In addition, the Extraordinary General Shareholders Meeting of Consolidar AFJP S.A. approved a voluntary reduction in capital stock for 75,000 on October 19, 2009. In turn, the IGJ conferred its approval to the capital reduction mentioned on January 11, 2010. In this respect, on January 19, 2010 the shareholders were transferred their capital contributions in conformity with the above-mentioned reduction.
BBVA Francés, in its capacity as shareholder requested that Consolidar AFJP S.A. (undergoing liquidation proceedings) should file a note with the Argentine Ministry of Economy and Public Finance and with the Argentine Social Security Authority to commence discussions within the framework of Law Nr. 26,425 in order to identify one or more resolution alternatives in connection with the consequences resulting from the events caused by the enactment of that Law. This note was filed by Consolidar AFJP S.A. (undergoing liquidation proceedings) on June 11, 2010.
On December 7, 2010, Consolidar AFJP S.A. (undergoing liquidation proceedings) filed an action for damages against the National State and the Ministry of Labor, Employment and Social Security with the court of original Federal Jurisdiction over Contentious Administrative Matters Nr. 4, Clerk of Courts Office Nr. 7, case file Nr. 40,437/2010. The complaint was ratified by BBVA Francés in its capacity as majority shareholder in that Company. On July 15, 2011, Consolidar AFJP S.A. (undergoing liquidation proceedings) and BBVA Francés filed with the same court an enhanced complaint for determining the amounts claimed as damages. On March 9, 2012, the Court ordered the service of process on the National State. On November 23, 2012, the Court handed down a resolution demanding the production of evidence within a term of forty days. On May 13, 2013, the Court hearing in the case ordered that evidence be produced, The Company is providing depositions, documentary evidence and expert witnesses reports. On May 28, 2013, the Company accompanied the statements and the testimony of witnesses, as the case is currently at the evidence production stage.
4. | MINORITY INTEREST IN SUBSIDIARIES |
The breakdown of balances in the Minority interest in subsidiaries account is as follows:
12-31-2016 | 12-31-2015 | |||||||
Consolidar Administradora de Fondos de Jubilaciones y Pensiones S.A. (undergoing liquidation proceedings) |
2,784 | 8,970 | ||||||
BBVA Francés Valores S.A. |
2,905 | 1,289 | ||||||
PSA Finance Argentina Cía. Financiera S.A. |
352,404 | 327,554 | ||||||
Volkswagen Financial Services Compañía Financiera S.A. |
261,707 | , | ||||||
BBVA Francés Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión |
341 | 323 | ||||||
|
|
|
|
|||||
Total |
620,141 | 338,136 | ||||||
|
|
|
|
5. | RESTRICTIONS ON ASSETS |
a) | BBVA Francés Valores S.A. holds two shares of Mercado de Valores de Buenos Aires S.A. booked in the amount of 66,400 and 22,000 as of December 31, 2016 and 2015, respectively. These shares have been pledged in favor of CHUBB Argentina de Seguros S.A. in security of the contract this insurance company executed with Mercado de Valores de Buenos Aires S.A. to cover the latters guaranteeing any noncompliance of the company with their obligations. |
b) | See note 7 to the stand-alone financial statements of the Bank. |
- 81 - |
6. | STATEMENT OF CASH AND CASH EQUIVALENTS FLOW |
The Statements of Cash and cash equivalents flow explains the changes in cash and cash equivalents. For such purpose, a detail is supplied of the items that the Bank considers to be cash and cash equivalents:
12-31-16 | 12-31-2015 | 12-31-2014 | ||||||||||
a) Cash and due from banks |
48,226,107 | 27,970,286 | 12,559,464 | |||||||||
b) Loans to financial sectors, call granted maturity date less than three months. |
630,000 | 393,000 | 392,500 | |||||||||
|
|
|
|
|
|
|||||||
CASH AND CASH EQUIVALENTS |
48,856,107 | 28,363,286 | 12,951,964 | |||||||||
|
|
|
|
|
|
Items b) is considered to be cash equivalents because it is held in order to meet short-term commitments, they are readily convertible in known cash amounts, they are subject to insignificant risk of changes in value and their maturity is less than three months.
7. | BREAKDOWN OF MAIN ITEMS |
The detail of the main items included in financial statements is as follows:
12-31-2016 | 12-31-2015 | |||||||
a) GOVERNMENT AND PRIVATE SECURITIES |
||||||||
* Holdings at fair value |
||||||||
Secured Bonds due in 2020 |
1,737,508 | 1,540,136 | ||||||
Federal Government Bonds adjusted by CER due 2021 |
649,721 | , | ||||||
National Treasury Bonds in Pesos fixed rate maturing 09/19/18 |
542,000 | , | ||||||
National Treasury Bonds fixed rate maturing 2021 |
327,356 | , | ||||||
Peso-denominated Discount governed by Argentine Law maturing in 2033 |
227,048 | 432,131 | ||||||
Federal Government Bonds in Pesos Badlar + 325 pbs maturing in 2020 |
219,240 | , | ||||||
Federal Government Bonds in US Dollar 7% maturing in 2017 |
197,363 | 11,220 | ||||||
National Treasury Bonds fixed rate maturing 2023 |
193,022 | , | ||||||
Federal Government Bonds in Pesos Badlar + 300 bp maturing in 2017 |
, | 519,214 | ||||||
Federal Government Bonds in US Dollars 0,75% due 2017 |
, | 70,053 | ||||||
Federal Government Bonds in Pesos Badlar + 200 bp due 2017 |
, | 232,675 | ||||||
Argentine Bond of Saving towards economic development |
, | 201,993 | ||||||
Federal Government Bonds in Pesos Badlar + 200 bp due 2016 |
, | 117,593 | ||||||
Debt Consolidation Bonds Sixth Series |
, | 21,120 | ||||||
Federal Government Bonds in US Dollars 8,75% due 2024 |
, | 4,310 | ||||||
US Dollar-linked Argentine Government Bond at 1,75% maturing in 2016 |
, | 38,550 | ||||||
Argentine Treasury Bonds 18 months maturing 09-30-16 |
, | 31,725 | ||||||
Other |
211,673 | 2,458 | ||||||
|
|
|
|
|||||
Total |
4,304,931 | 3,223,178 | ||||||
|
|
|
|
- 82 - |
12-31-2016 | 12-31-2015 | |||||||
* Holdings booked at amortized cost |
||||||||
Treasury Bills in US Dollar maturing 03/20/2017 |
787,486 | , | ||||||
Debt Securities of the Province of Buenos Aires in pesos Series II |
100,277 | , | ||||||
Other |
16,326 | 164 | ||||||
|
|
|
|
|||||
Total |
904,089 | 164 | ||||||
|
|
|
|
|||||
* Instruments issued by the BCRA |
||||||||
BCRA Bills (LEBAC) |
7,375,103 | 11,086,580 | ||||||
|
|
|
|
|||||
Total |
7,325,103 | 11,086,580 | ||||||
|
|
|
|
|||||
* Investments in listed private securities |
||||||||
FBA Ahorro Pesos Investment Fund |
121,775 | 97,943 | ||||||
FBA Bonos Argentina Investment Fund |
17,600 | 13,020 | ||||||
FBA Renta Pesos Plus Investment Fund |
10,083 | , | ||||||
Other |
5,441 | 1,518 | ||||||
|
|
|
|
|||||
Total |
154,899 | 112,481 | ||||||
|
|
|
|
|||||
- Allowances |
(213 | ) | (212 | ) | ||||
|
|
|
|
|||||
Total |
12,738,809 | 14,422,191 | ||||||
|
|
|
|
|||||
b) LOANS - Other |
||||||||
Loans for prefinancing and export financing |
8,486,700 | 1,530,180 | ||||||
Other fixed-rate financial loans |
2,948,343 | 1,996,772 | ||||||
Financial loans communication A 5319 |
1,936,170 | 2,039,062 | ||||||
Loans to financial entities not resident in Argentina |
1,674,658 | 82,889 | ||||||
Other loans to Concessionaires F.P. |
1,454,016 | , | ||||||
Other loans at reduced rate |
208,399 | 49,462 | ||||||
Other |
1,045,844 | 812,171 | ||||||
|
|
|
|
|||||
Total |
17,754,130 | 6,510,536 | ||||||
|
|
|
|
|||||
c) INVESTMENTS IN OTHER COMPANIES Other |
||||||||
In other companies - unlisted |
109,981 | 59,186 | ||||||
In companies-supplementary activities |
98,060 | 44,081 | ||||||
|
|
|
|
|||||
Total |
208,041 | 103,267 | ||||||
|
|
|
|
- 83 - |
12-31-2016 | 12-31-2015 | |||||||
d) OTHER RECEIVABLES Other |
||||||||
Guarantee deposits |
1,120,490 | 733,597 | ||||||
Tax prepayments |
667,314 | 298,586 | ||||||
Miscellaneous receivables |
637,255 | 940,360 | ||||||
Prepayments |
404,927 | 502,503 | ||||||
Loans to personnel |
175,507 | 166,143 | ||||||
Advances to personnel |
118,544 | 97,777 | ||||||
Other |
62,608 | 11,535 | ||||||
|
|
|
|
|||||
Total |
3,186,645 | 2,750,501 | ||||||
|
|
|
|
|||||
e) OTHER LIABILITIES FROM FINANCIAL TRANSACTIONS - Other |
||||||||
Accounts payable for consumption |
4,724,388 | 3,171,773 | ||||||
Collections and other operations for the account of third parties |
1,569,700 | 1,778,719 | ||||||
Other withholdings and collections at source |
1,320,614 | 985,654 | ||||||
Money orders payable |
538,216 | 1,405,633 | ||||||
Loans received from Fondo Tecnológico Argentina (FONTAR) and Banco de Inversión y Comercio Exterior (BICE) |
369,284 | 42,526 | ||||||
Fees collected in advance |
332,523 | 131,299 | ||||||
Pending Banelco debit transactions |
147,393 | 143,161 | ||||||
Third-party collection Floor Planning VW |
137,134 | , | ||||||
Loans received from Interamerican Development Bank (IDB) |
17,567 | 6,983 | ||||||
Accrued commissions payable |
16,274 | 4,705 | ||||||
Social security payment orders pending settlement |
14,945 | 8,471 | ||||||
Funds raised from third parties |
13,392 | 17,800 | ||||||
Other |
102,073 | 51,042 | ||||||
|
|
|
|
|||||
Total |
9,303,503 | 7,747,766 | ||||||
|
|
|
|
|||||
12-31-2016 | 12-31-2015 | |||||||
f) OTHER LIABILITIES Other |
||||||||
Accrued taxes |
1,561,214 | 866,450 | ||||||
Miscellaneous payables |
1,294,341 | 868,507 | ||||||
Accrued salaries and payroll taxes |
984,983 | 684,949 | ||||||
Amounts collected in advance |
969,780 | 808,695 | ||||||
Other |
4,559 | 3,827 | ||||||
|
|
|
|
|||||
Total |
4,814,877 | 3,232,428 | ||||||
|
|
|
|
- 84 - |
12-31-2016 | 12-31-2015 | |||||||
g) MEMORANDUM ACCOUNTS DEBIT CONTROL Other |
||||||||
Items in safekeeping |
118,909,223 | 84,155,252 | ||||||
Securities representative of investment in custody safekeeping on behalf of the Guarantee Fund for the Sustainability of the Pay-as-you-go System managed by the Argentine Republic |
101,831,865 | 25,005,318 | ||||||
Checks not yet credited |
9,756,237 | 5,385,156 | ||||||
Collections items |
1,264,327 | 538,366 | ||||||
Checks drawn on the Bank pending clearing |
1,125,465 | 666,247 | ||||||
Cash in custody on behalf of the BCRA |
920,400 | 1,009,188 | ||||||
Other |
222,730 | 202,445 | ||||||
|
|
|
|
|||||
Total |
234,030,247 | 116,961,972 | ||||||
|
|
|
|
|||||
h) SERVICE CHARGE EXPENSE - Other |
||||||||
Turn-over tax |
566,787 | 417,365 | ||||||
Insurance paid on lease transactions |
199,843 | 152,015 | ||||||
Insurance paid for life insurance |
88,332 | , | ||||||
Other |
41,904 | 25,427 | ||||||
|
|
|
|
|||||
Total |
896,866 | 594,807 | ||||||
|
|
|
|
|||||
i) OTHER INCOME Other |
||||||||
Deferred income tax (1) |
327,423 | 6,800 | ||||||
Income from the Credit Card Guarantee Fund |
151,343 | 64,609 | ||||||
Related parties expenses recovery |
64,820 | 59,432 | ||||||
Interest on loans to personnel |
26,751 | 28,812 | ||||||
Income from payment orders |
18,691 | 106 | ||||||
Rentals |
2,830 | 2,448 | ||||||
Other |
107,785 | 72,245 | ||||||
|
|
|
|
|||||
Total |
699,643 | 234,452 | ||||||
|
|
|
|
(1) | Offset by the same amount recorded in the account Charge for uncollectibility of other receivable and other allowances from other expense category. |
j) OTHER EXPENSE Other |
||||||||
Insurance losses |
33,544 | 19,378 | ||||||
Donations |
27,545 | 22,290 | ||||||
Turn-over tax |
17,800 | 10,141 | ||||||
Private health insurance for former employees |
17,206 | 14,541 | ||||||
Unrecoverable legal costs |
8,835 | , | ||||||
Charges for administrative, disciplinary and criminal penalties |
5,000 | 48,817 | ||||||
Other |
68,601 | 50,477 | ||||||
|
|
|
|
|||||
Total |
178,527 | 165,644 | ||||||
|
|
|
|
- 85 - |
EXHIBIT I
CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY
CATEGORIES AND GUARANTIES RECEIVED
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
COMMERCIAL PORTFOLIO |
||||||||
Normal performance |
42.728.348 | 27.579.149 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties A |
1.751.341 | 1.715.283 | ||||||
Preferred collaterals and counter guaranties B |
1.413.827 | 1.280.428 | ||||||
Without senior security or counter guaranties |
39.563.180 | 24.583.438 | ||||||
With special follow-up |
13.116 | 15.957 | ||||||
|
|
|
|
|||||
Under observation |
5.968 | 8.788 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
3.613 | 5.419 | ||||||
Without senior security or counter guaranties |
2.355 | 3.369 | ||||||
Negociations for recovery or re-financing agreements underway |
7.148 | 7.169 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
6.177 | 859 | ||||||
Without senior security or counter guaranties |
971 | 6.310 | ||||||
Con problemas |
17.568 | 1.015 | ||||||
|
|
|
|
|||||
Con garantías y contragarantías preferidas B |
, | 683 | ||||||
Sin garantías ni contragarantías preferidas |
17.568 | 332 | ||||||
With high risk of uncollectibility |
11.385 | 13.134 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties B |
7.105 | 7.105 | ||||||
Without senior security or counter guaranties |
4.280 | 6.029 | ||||||
Uncollectible |
, | 5.506 | ||||||
|
|
|
|
|||||
Without senior security or counter guaranties |
, | 5.506 | ||||||
|
|
|
|
|||||
TOTAL |
42.770.417 | 27.614.761 | ||||||
|
|
|
|
- 86 - |
EXHIBIT I
(Contd.)
CONSOLIDATED CLASSIFICATION OF FINANCING FACILITIES BY
CATEGORIES AND GUARANTIES RECEIVED
AS OF DECEMBER 31, 2016 AND 2015
(Translation of financial statements originally issued in Spanish - See note 23)
-Stated in thousands of pesos-
12.31.16 | 12.31.15 | |||||||
CONSUMER AND HOUSING PORTFOLIO |
||||||||
Normal performance |
40.347.631 | 33.605.457 | ||||||
|
|
|
|
|||||
Preferred collaterals and counter guaranties A |
11.534 | 18.075 | ||||||
Preferred collaterals and counter guaranties B |
5.808.488 | 4.571.601 | ||||||
Without senior security or counter guaranties |
34.527.609 | 29.015.781 | ||||||
Low Risk |
420.832 | 254.741 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
68.816 | 59.473 | ||||||
Without senior security or counter guaranties |
352.016 | 195.268 | ||||||
Medium Risk |
363.965 | 192.418 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
20.628 | 16.513 | ||||||
Without senior security or counter guaranties |
343.337 | 175.905 | ||||||
High Risk |
198.986 | 129.879 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
24.799 | 19.573 | ||||||
Without senior security or counter guaranties |
174.187 | 110.306 | ||||||
Uncollectible |
41.900 | 41.604 | ||||||
|
|
|
|
|||||
Other collaterals and counter guaranties B |
18.483 | 22.370 | ||||||
Without senior security or counter guaranties |
23.417 | 19.234 | ||||||
Uncollectible, classified as such under regulatory requirements |
87 | 140 | ||||||
Other collaterals and counter guaranties B |
61 | 74 | ||||||
Without senior security or counter guaranties |
26 | 66 | ||||||
|
|
|
|
|||||
TOTAL |
41.373.401 | 34.224.239 | ||||||
|
|
|
|
|||||
GENERAL TOTAL (1) |
84.143.818 | 61.839.000 | ||||||
|
|
|
|
(1) | Items included: Loans (before allowances): Other receivables from financial transactions; Unlisted corporate bonds and Other receivables by debtor classification regulations; Receivables from financial leases(before allowances); Memorandum accounts - Credit-Contingent: Credit lines granted (unused portion) covered by debtor classification regulations, Other guaranties given covered by debtor classificacition regulations and Other covered by debtor classification regulations. |
- 87 - |
INFORMATIVE SUMMARY OF ACTIVITY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2016
(Consolidated amounts Stated in thousand Pesos)
BBVA Francés booked a gain of 3,643,672, thus reaching an average return on equity (ROE) of 24.1% and an average return on assets (ROA) of 2.8%.
BBVA Francés continues to be focused on improving the experiences of clients during each one of their contacts with the Bank. To this end, the Entity has a broad distribution model with countrywide presence and a network of 302 customer service points. Out of these, 251 are retail banking branches and 34 are branches that specialize in small and medium enterprises and institutions. Corporate banking, in turn, is divided into industry sectors: Consumption, Heavy Industries and Energy that interact with large enterprises on a personalized basis. To supplement its distribution network, BBVA Francés has 15 banks on an on the premises modality, 1 point of sales, 1 point of Express customer service, 728 automatic teller machines and 789 self-service terminals. As of December 31, 2016, the Bank had 6.253 employees.
In 2016, BBVA Francés focused on establishing new user experience standards, providing groundbreaking digital platforms, improving and increasing the interaction with both customers and non-customers, offering outstanding product experiences, and developing more efficient service and distribution models, while ensuring a larger scale.
On the other hand, the Bank made efforts to acquire new digital customers (web + mobile) in order to boost digital sales through the development of products with high potential.
The Bank also continued designing new business models and leveraging the strategic partner model (LATAM, PSA Finance Argentina Cía. Financiera S.A., Rombo Cía. Financiera S.A., Volkswagen Financial Services Cía. Financiera S.A., etc.) to offer larger-scale products and services in an attempt at gaining new customers.
Regarding the performance of the Bank in terms of activity, the Banks portfolio of loans to the private sector totaled 80,409,254 as of December 31, 2016, which points to an 39.6% growth rate in the last twelve months, while during the quarter the growth rate was of 10.7%. The market share increased by 22 basis points to 6.7% at the end of the year.
This growth was supported by a significant increase in the portfolio of loans to companies, which grew by 6.5% in the last twelve months, resulting in a 99 basis-point increase in the share of commercial loans, reaching 7.15%. Foreign trade finance had an outstanding performance over the period.
Consumer finance rose by 21.8% over the year, with consumer loans and credit cards showing a good performance (a rise of 27.6% and 22.9%, respectively).
The Bank continued reinforcing its strategy in the secured loan business. In this regard, in September 2016, BBVA Francés consummated the purchase of a 51% equity interest in Volkswagen Financial Services Compañía Financiera S.A., with such transaction being followed by a capital increase, as established at the Shareholders Meeting of Volkswagen Financial Services Compañía Financiera S.A. (see Note 19). As at December 2016, 40.3% of such secured loans are granted through BBVA Francés and its affiliates.
Regarding asset quality, the Bank has been able to maintain the best indicators of the Argentine financial system, in an environment that has shown signs of deterioration. The portfolio quality ratio (non-performing Financing / Total financing) was 0.75 %, with a coverage ratio (total allowances / non-performing Financing) of 261.24 % at the end of the period.
- 88 - |
As of December 31, 2016, the portfolio of Government securities, totaled 5,209,020 and represented 3.4% of the Banks Total assets, while the instruments issued by the Argentine Central Bank, net of repurchase agreements, totaled 7,444,258 as of that date and since they are short-term, they are used in order to allocate liquidity.
As to liabilities, total clients resources totaled 114,621,753, indicative of 49.1% growth in the last twelve months. By kind of product, in the same period, sight deposits grew by 53.7% and term deposits grew by 12.8%. On the other hand and following the application of the tax amnesty scheme, the Bank booked balances in special accounts of 11,513,297, accounting for 10% of total deposits to the private sector.
BBVA Francés maintains sufficient levels of liquidity and solvency. As of December 31, 2016, liquid assets (Cash and cash equivalents plus Government and Private securities) represented 53.2% of the Banks deposits. Besides, the capital ratio was at 13.6% of risk-weighted assets. The Bank surpassed capital minimum requirements by 6,552,216.
Net financial income showed adequate performance, experiencing an increase of 31.6% over the year, while revenues grew 36.9% mainly by the intermediation with the private sector and increased exchange gains following the elimination of exchange controls and a rise in exchange trades, the expenses increased at a faster pace (44%), due tohigher interest expense caused by a rise in the average rate and its faster impact on liabilities.
The provision for loan losses increased compared to the same quarter of 2015 resulted of the portfolio impairment, mainly the retail portfolio and a greater volume of placements.
Service revenues, net increased by 17.6% over the year, fees earned grew by 35.4% to 8,255,907, mainly due to the revenues derived from increased credit card spending and increased activity on deposit accounts. On the other hand, expenses grew by 62.5% to 3,933,108, as a result of higher fees paid on the LATAM Pass program, credit card spending promotions and customer acquisition campaigns, resulting in over 20,000 new customers. Finally, pursuant to Communication A 5928 laid down by the Argentine Central Bank, certain changes were introduced to the insurance business effective September 1, 2016. For instance, users may not be charged any kind of fees and/or expense for credit life insurance, which thereafter are required to be borne by financial entities, thus resulting in increased fees paid in 2016.
Administrative expenses totaled 9,557,633, a 44.9% increase compared to 2015. The increase in personnel expenses was attributable to the pay rise and the other benefits agreed upon with the trade union, in addition to an 8% increase in the headcount. General expenses reflected further increases in cash logistics, rental payments, advertising, electricity, communications and taxes. It should be noted that the increase in expenses is the result of the increased volume of activities, an overall rise in prices, currency depreciation, and rising tariffs.
Outlook
BBVA Francés strategy for 2017 will be supported by three pillars which are closely related to customers needs and requirements:
| Improve customers experience |
In addition to focusing on quality standards, the Bank will also place the emphasis on redefining processes and establishing measurable service levels, both for internal and external customers, all of which will require further innovation.
Concerning segments, the Bank will work on increasing the flexibility of the service model and the current roles and functions to deliver a better service. The Bank seeks to empower its officials so that they can respond to their customers product needs and provide new service channels. Another segmentation pillar will be the investment business: the Bank will seek to generate new alternatives by leveraging the digital world in order to create a product offering that differentiates it in the market.
| Distribution |
- 89 - |
BBVA Francés seeks to increase the customer portfolio and, to such end, it will need to have capacities in place to support profitable and efficient growth. Hence, the strategy is oriented to the development of channels. In this regard, it is of utter importance that the entire customer base be digitalized in order to offer additional contact and service options, so that customers may choose their preferred service channel. Such action is also important to foster growth in sales and cross-selling, as it increases the contact potential.
| Segments or products |
The Bank will work on four pillars in order to lead the development of the value proposition to customers:
Business loans and mortgages : two of the products with most promissory growth in the market over the next year. The Bank will develop an online engine for mortgages while, for businesses, it will develop an engine that facilitates the expansion of customer acquisition networks in a competitive fashion.
Referrals, Payroll and Retailers : customers as business partners.
Businesses: the Bank is developing new products tailored to the customers needs.
Loans: a competitive offering to grow the customer base.
- 90 - |
CONSOLIDATED BALANCE SHEET STRUCTURE COMPARED TO PRIOR FISCAL YEARS
(Stated in thousands of pesos)
12-31-2016 | 12-31-2015 | 12-31-2014 | 12-31-2013 | 12-31-2012 | ||||||||||||||||
Total Assets |
151,752,711 | 110,736,198 | 74,288,906 | 58,523,624 | 44,784,579 | |||||||||||||||
Total Liabilities |
134,672,535 | 96,681,699 | 63,680,972 | 51,195,049 | 39,534,662 | |||||||||||||||
Minority Interest in subsidiaries |
620,141 | 338,136 | 276,058 | 172,395 | 117,981 | |||||||||||||||
Stockholders´Equity |
16,460,035 | 13,716,363 | 10,331,876 | 7,156,180 | 5,131,936 | |||||||||||||||
Total Liabilities + Minority Interest in subsidiaries + Stockholders´Equity |
151,752,711 | 110,736,198 | 74,288,906 | 58,523,624 | 44,784,579 |
- 91 - |
CONSOLIDATED STATEMENT OF INCOME STRUCTURE COMPARED TO PRIOR FISCAL YEARS
(Stated in thousands of pesos)
12-31-2016 | 12-31-2015 | 12-31-2014 | 12-31-2013 | 12-31-2012 | ||||||||||||||||
Net financial income |
12,424,096 | 9,443,778 | 7,616,880 | 4,989,599 | 3,657,050 | |||||||||||||||
Allowances for loan losses |
(1,054,828 | ) | (637,017 | ) | (574,663 | ) | (453,264 | ) | (256,259 | ) | ||||||||||
Net income from services |
4,322,799 | 3,675,056 | 3,349,448 | 2,498,521 | 1,846,467 | |||||||||||||||
Administrative expenses |
(9,557,633 | ) | (6,595,146 | ) | (5,607,097 | ) | (3,900,469 | ) | (3,061,708 | ) | ||||||||||
Net gain from financial transactions |
6,134,434 | 5,886,671 | 4,784,568 | 3,134,387 | 2,185,550 | |||||||||||||||
Miscellaneous income and expenses net |
65,328 | 84,357 | 194,315 | 65,731 | (21,000 | ) | ||||||||||||||
Results of minority interest in subsidiaries |
(106,220 | ) | (136,071 | ) | (103,663 | ) | (54,414 | ) | (36,195 | ) | ||||||||||
Income tax |
(2,449,870 | ) | (2,050,470 | ) | (1,670,724 | ) | (1,121,460 | ) | (864,676 | ) | ||||||||||
Net income for the fiscal year |
3,643,672 | 3,784,487 | 3,204,496 | 2,024,244 | 1,263,679 |
- 92 - |
CONSOLIDATED CASH FLOWS STRUCTURE COMPARED TO THE PRIOR FISCAL YEARS
(Stated in thousands of pesos)
12-31-2016 | 12-31-2015 | 12-31-2014 | 12-31-2013 | 12-31-2012 | ||||||||||||||||
Net cash flow provided by operating activities |
26,125,478 | 18,499,162 | 1,484,429 | 6,262,691 | 3,703,734 | |||||||||||||||
Net cash flow used in investment activities |
(2,472,496 | ) | (1,946,853 | ) | (1,442,772 | ) | (1,162,439 | ) | (691,973 | ) | ||||||||||
Net cash flow used in financing activities |
(3,159,161 | ) | (1,140,987 | ) | (693,313 | ) | (545,136 | ) | (581,581 | ) | ||||||||||
Financial results and results from holdings of cash and cash equivalents (including interest) |
, | , | , | 54 | , | |||||||||||||||
Total cash provided / (used) during the fiscal year |
20,492,821 | 15,411,322 | (651,656 | ) | 4,555,170 | 2,430,180 |
- 93 - |
STATISTICAL RATIOS COMPARED TO PRIOR FISCAL YEARS
(year-over-year variations in balances)
12-31-2016/15 | 12-31-2015/14 | 12-31-2014/13 | 12-31-2013/12 | 12-31-2012/11 | ||||||||||||||||
Total Loans |
39.60 | % | 36.07 | % | 13.96 | % | 28.17 | % | 24.43 | % | ||||||||||
Total Deposits |
49.12 | % | 49.42 | % | 17.56 | % | 28.08 | % | 17.14 | % | ||||||||||
Net Income |
-3.72 | % | 18.10 | % | 58.31 | % | 60.19 | % | 25.67 | % | ||||||||||
Stockholders Equity |
20.00 | % | 32.76 | % | 44.38 | % | 39.44 | % | 32.67 | % |
- 94 - |
RATIOS COMPARED TO PRIOR FISCAL YEARS
12-31-2016 | 12-31-2015 | 12-31-2014 | 12-31-2013 | 12-31-2012 | ||||||||||||||||
Solvency (1) |
12.17 | % | 14.14 | % | 16.15 | % | 13.93 | % | 12.94 | % | ||||||||||
Liquidity (2) |
53.19 | % | 55.15 | % | 47.03 | % | 37.34 | % | 37.22 | % | ||||||||||
Tied-up capital (3) |
2.92 | % | 2.62 | % | 3.05 | % | 2.54 | % | 1.72 | % | ||||||||||
Indebtedness (4) |
8.22 | 7.07 | 6.19 | 7.18 | 7.73 | |||||||||||||||
Profitability (5) |
24.15 | % | 31.47 | % | 36.65 | % | 32.95 | % | 28.08 | % |
(1) | Total Shareholders equity/Liabilities (including minority interests in subsidiaries) |
(2) | Sum of Cash and due from Banks and Government and Private securities/Deposits |
(3) | Sum of Premises and equipment, other assets and Intangible assets/Assets |
(4) | Total Liabilities (including minority interests in subsidiaries)/Shareholders equity |
(5) | Net result on Average Total Equity |
- 95 - |
PROPOSED DISTRIBUTION OF EARNINGS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
-Stated in thousands of pesos-
UNAPPROPIATED EARNINGS (1) |
12,129,150 | |||
To the Legal reserve (20% over 3,643,672) |
(728,734 | ) | ||
|
|
|||
SUBTOTAL 1 |
11,400,416 | |||
|
|
|||
Adjustments (section 2 as per the Earnings distribution provisions unified text) |
(17,562 | ) | ||
|
|
|||
SUBTOTAL 2 |
11,382,854 | |||
|
|
|||
|
|
|||
BALANCE AVAILABLE FOR DISTRIBUTION (2) (3) |
2,902,144 | |||
|
|
|||
To cash dividends |
, | |||
To undistributed earnings |
2,914,938 |
(1) | It includes the Voluntary reserve for future distributions of income for 8,485,478. |
(2) | In compliance with Section 3 Liquidity and Solvency Check and Section 4 Additional Capital Margins of Earnings Distribution, text as revised. |
(3) | The Board of Directors has decided to postpone the proposal of the destination of the profits of the fiscal year 2016 until the meeting in which the Ordinary and Extraordinary General Assembly will be convened. Dividend distribution is subject to approval by the Banks Ordinary and Extraordinary Shareholders Meeting. Prior to that, the Argentine Central Bank has to hand down its approval first (Note 14 to the stand-alone financial statements). This proposed distribution of earnings may undergo changes as a result of these authorizations |
Deloitte & Co. S.A. | ||||
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Tel.: (+54-11) 4320-2700 | ||||
Fax: (+54-11) 4325-8081/4326-7340 | ||||
www.deloitte.com/ar |
INDEPENDENT AUDITORS REPORT
To the President and the Board of Directors of
BBVA BANCO FRANCÉS S.A.
Reconquista 199
City of Buenos Aires
Report on the financial statements
1. | Identification of the financial statements subject to audit |
We have audited:
a) | the accompanying stand-alone financial statements of BBVA BANCO FRANCÉS S.A. (BBVA Francés or the Bank), which comprise the balance sheet as of December 31, 2016 and the related statement of income, statement of changes in stockholders´ equity and cash and cash equivalents flow for the fiscal year then ended, with a summary of significant accounting policies and other relevant information included in notes 1 to 23, and supplemental Exhibits A through L, N and O; and |
b) | the accompanying consolidated financial statements of BBVA Francés and its subsidiaries (listed in note 1 to the consolidated financial statements), which comprise the consolidated balance sheet as of December 31, 2016 and the consolidated statement of income and the consolidated cash and cash equivalents flow for the fiscal year then ended, with other relevant information included in notes 1 to 7 and the supplemental Exhibit 1. |
The figures and other information for the year ended December 31, 2015 are an integral part of these financial statements and are intended to be read only in relation to those financial statements.
2. | Banks responsibility for the Financial Statements |
The Bank is responsible for the preparation and fair presentation of such accompanying financial statements in conformity with accounting standards established by the Argentine Central Bank (BCRA) applicable to financial institutions, as well as responsible of internal control considered necessary to enable the presentation of financial statements free from material misstatement.
3. | Auditors Responsibility |
Our responsibility is to express an opinion on the accompanying financial statements based on our audit. We conducted our audit in accordance with auditing standards established in the Technical Pronouncement N° 37 of the Argentine Federation of Professional Councils in Economic Sciences and the Minimum Standards applicable for External Audits for financial institutions established by BCRA. Those standards require that we comply with ethical requirements, as well as we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures, substantially on a test basis, to obtain audit evidence about the figures and disclosures in the financial statements. The procedures selected and the assessment of the risks of material misstatement of the financial statements, depend on the auditor´s judgment. In making those risk assessments, the auditor considers internal control relevant to the Banks preparation and fair presentation of the financial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Banks internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Bank, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
4. | Opinion |
In our opinion, the stand-alone and the consolidated financial statements referred to in paragraphs a) and b) of caption 1 of this report present fairly, in all material respects, the financial position of BBVA Banco Francés S.A. as of December 31, 2016, and the results of its operations, changes in its stockholders equity and its cash and cash equivalents flow for the fiscal year then ended, in accordance with accounting standards established by BCRA.
5. | Emphasis on certain matters disclosed in the financial statements |
We draw attention to note 3 to the stand-alone financial statements and note 2 to the consolidated financial statements, which describe that the financial statements referred to in paragraphs a) and b) of caption 1 of this report have been prepared by the Bank in accordance with accounting standards established by the BCRA, which differ from the Argentine professional accounting standards. Our opinion is not qualified in respect of this matter.
6. | English translation of statutory financial statements |
This report and the financial statements referred to in caption 1 have been translated into English for the convenience of English-speaking readers. As further explained in note 23 to the accompanying stand-alone financial statements, the financial statements (both the stand-alone and the consolidated financial statements) are the English translation of those originally prepared by the Bank in Spanish and presented in accordance with the accounting standards of BCRA and except for the matters
described in caption 5, with the Argentine professional accounting standards. The effects of the differences between the accounting standards of BCRA and the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, results of operations, stockholders equity or cash and cash equivalents flow in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.
City of Buenos Aires, February 9, 2017.
MARCELO BASTANTE
Partner
Deloitte & Co. S.A. Registro de Soc. Com. CPCECABA T°1 Folio 3
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (DTTL), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
Deloitte Touche Tomatsu Limited is a private Company limited by guarantee incorporated in England & Wales under Company number 07271800, and its registered office is Hill House, 1 Little new Street, London, EC4a, 3TR, United Kindom.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BBVA French Bank S.A. | ||||||
Date: March 2, 2017 |
By: |
/s/ Ignacio Sanz y Arcelus |
||||
Name: | Ignacio Sanz y Arcelus | |||||
Title: | Chief Financial Officer |
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