Subscribe to a Global-Regulation Premium Membership Today!

BANCO CENTRAL DE LA REPUBLIC ARGENTINA AND FINANCIAL ENTITIES Law 25,780 Reforms to the Law of Financial Institutions and the Organic Charter of the Central Bank of the Argentine Republic. Temporary standard during the emergency period .Ley 25.561.. Sanctioned: August 27, 2003. Partially promulgated: September 5, 2003.

The Senate and Chamber of Deputies of the Argentine Nation assembled in Congress, etc. sanction with force of Law:

CHAPTER I

Reforms to the Financial Institutions Act

ARTICLE 1 el Replace Section 35 bis of the Financial Institutions Act No. 21.526 and its amendments, with the following:

"II) Exclusion of assets and liabilities and their transfer.

(a) To have the exclusion of assets at their choice, assessed in accordance with the accounting standards applicable to the balance sheets of the financial entities, adjusted to their net performance value, in an amount not exceeding that of the different categories of the liability mentioned in subparagraph (b).

Assets subject to real levy of clothing and mortgage may be excluded for the net value resulting from subtracting to the value of the asset, estimated at market prices, the nominal value of the receivable, assuming that the disposition of the encumbered asset has the obligation to satisfy the rights of the mortgage or borrower, until the net proceeding of its sale. Property subject to judicial embargo may be excluded without limitation from any kind.

THE CENTRAL BANCO OF THE REPUBLIC ARGENTINA will generally issue the relevant asset valuation standards.

For the purposes of this subparagraph and when the BANCO CENTRAL OF THE ARGENTINA REPUBLIC it deems appropriate, financial trusts may be established with all or part of the assets of the entity, issuing UNO (1) or more certificates of participation by nominal values equivalent to the liabilities that are excluded. The entity, if any, shall assume the status of beneficiary or trustee.

(b) The BANCO CENTRAL DE LA REPUBLIC ARGENTINA may totally or partially exclude the liabilities referred to in article 49, subparagraph (e), as well as, where appropriate, the provisions of the BANCO CENTRAL DE LA REPUBLIC ARGENTINA defined in article 53, respecting the priority order between these creditors. Partial exclusion shall respect the priority order contained in article 49 (e) without assigning differential treatment to liabilities of the same degree.

(c) Authorize and entrust the transfer of assets and liabilities excluded under subparagraphs (a) and (b) for financial entities. Assets on fiduciary property may also be transferred to financial trusts under Act No. 24,441, where necessary to achieve the purpose of this article. "

ARTICLE 2 el Replace Section 35 bis of the Financial Institutions Act No. 21.526 and its amendments, with the following:

"III) Judicial intervention.

If necessary, in order to implement the alternatives provided for in this article, the BANCO CENTRAL OF THE ARGENTINA REPUBLIC shall request the trade judge, the judicial intervention of the entity, with displacement of the statutory administration authorities, and determine the powers it deems necessary in order to fulfill the assigned function.

Upon this request, the judge shall immediately and without substance decree the judicial intervention of the financial entity, having the persons designated by the BANCO CENTRAL OF THE ARGENTINA REPUBLIC as judicial intervenors, with all the powers determined by the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, keeping them in their respective positions until the full performance of the assigned task is verified.

The judicial intervention of an entity subject to the procedure set out in Sub-paragraph II) shall result in the settlement, before the judge involved, of all judgements of property content that affect the assets excluded or relate to the liabilities excluded. "

Article 3 el Replace Article 35 bis of the Financial Institutions Act No. 21.526 and its amendments to the following:

"IV) Responsibility.

In the cases provided for in this article, the provisions of article 49, second paragraph in fine of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, approved by article 1 of Act No. 24,144 and its amendments, with respect to it, the trusts referred to in article 18, subparagraph (b) of the said order, and the third parties that had carried out the acts in question, except the existence of the dolo. The lack of the right to claim damages and consequent absence of legitimation reaches the same entity and its creditors, partners, shareholders, administrators and representatives. "

ARTICLE 4 el Replace Section 35 bis, Sub-paragraph V, of the Financial Institutions Act No. 21.526 and its amendments, as follows:

"V" Transfers of assets and liabilities excluded.

(a) Transfers of assets and liabilities of financial entities authorized, entrusted or disposed of by the ARGENTINA REPUBLIC CENTRAL BANCO, as well as any other act that complements the above or becomes necessary to carry out the restructuring of a financial entity, are governed exclusively by the provisions of this law, which is inapplicable to these cases by Law No. 11.867.

(b) Acts of enforced execution may not be initiated or continued on assets excluded whose transfer has authorized, commissioned or provided by the ARGENTIN REPUBLIC BANCO in the framework of this article, except that they have for the purpose the collection of a mortgage credit, pre-emptive or derived from a working relationship. Nor can precautionary measures be imposed on excluded assets. The judge acting for the purposes of the intervention provided for in Sub-paragraph III shall order, on his or her own motion or at the request of the interveners or of those who acquire assets in full or fiduciary property, without substance, the immediate lifting of the embargoes and/or obstructed general inhibitions, those who may not prevent the realization or transfer of the excluded assets by obliging the precautionary measures derived from the production of the work receivables.

(c) The acts authorized, commissioned or disposed of by the BANCO CENTRAL OF THE ARGENTINA REPUBLIC within the framework of this article that import the transfer of assets and liabilities or complement it or become necessary to specify the restructuring of a financial entity, as well as those relating to the reduction, increase and disposal of the social capital, are not subject to any judicial authorization or may be ineffective in respect of the assets excluded

(d) The creditors of the Financial Entity disposing of the excluded assets shall have no action or right against the acquisitions of such assets, unless they have special privileges that relapse on specified assets.

(e) The acquirer in full or fiduciary property who is transferred from an asset excluded by application of this norm may intervene in any judicial process in which the former holder acts as a party or third party and involves the assets excluded, in the same quality as the latter, replacing it as a main party, without requiring the express conformity of the opposing party. "

ARTICLE 5o Add as Article 35 ter of the Financial Institutions Act No. 21.526 and its amendments the following:

"Article 35 ter: The opportunity, merit and convenience of the acts adopted by the BANCO CENTRAL OF THE ARGENTINA REPUBLIC or the Superintendence of Financial Institutions and Changes, in exercise of the competences and functions awarded by Articles 49 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, and 34, 35 bis, 44, 45 of the law review The same regime will reach the complementary acts of the former adopted by other organs of the National Civil Service. "

ARTICLE 6 Replace the last paragraph of article 44 of the Financial Entities Act No. 21.526 and its amendments, which shall read as follows:

"In resolving the revocation of the authorization to operate or during the period of temporary suspension of a Financial Entity, the BANCO CENTRAL DE LA REPUBLIC ARGENTINA may order that the payment of the labour creditors provided for in Article 53 (b) be made, and the depositors of the general privilege provided for in Article 49 (i) and (ii), respecting the rank of the corresponding priority, "

ARTICLE 7 Incorporate as fifth paragraph of article 48 of the Financial Institutions Act No. 21.526 and its amendments the following text:

"Being the former entity in the process of judicial liquidation, the liquidator will submit within the time limit of CUARENTA and CINCO (45) working days counted from the acceptance of the post, a report that allows the judge to know the assets of the former financial entity and must immediately request the bankruptcy declaration if it warning the cessation of payments by itself, or by virtue of bank orders initiated by third parties. The judge should have it available if he warned of the existence of miscellaneous budgets. The liquidator who did not submit such a report shall be removed within the prescribed time limit, without the need for prior consideration. "

ARTICLE 8 . Default article 49(d) of the Financial Institutions Act No. 21.526 and its amendments. Article 9 s Replace article 49 (e) of the Financial Institutions Act No. 21.526 and its amendments, which shall read as follows:

"(e) With the priority order resulting from the following subparagraphs, they shall have general privilege for the collection of their claims over all other receivables, with the exception of the provisions with special privilege of clothing and mortgage and the labour creditors set out in Article 53 (a) and (b), the following:

(i) The deposits of natural and/or legal persons up to the sum of MIL PESOS CINCUENTA ($ 50,000), or their foreign currency equivalent, enjoyed this privilege only one person per deposit. Having more than one holder, the sum will be apportioned among the holders of the privileged imposition. For the purpose of determining privilege, the entire deposits that a person registers in the entity shall be computed.

(ii) Deposits made up of larger amounts, for amounts exceeding that indicated in the preceding paragraph.

(iii) Liabilities originated in commercial lines granted to the entity and directly affecting international trade.

The privileges set out in subparagraphs (i) and (ii) above shall not reach the deposits constituted by the persons connected, directly or indirectly, to the entity, according to the established guidelines or established in the future by the BANCO CENTRAL OF THE ARGENTINA REPUBLIC.

ARTICLE 10. el Replace article 49 (f) of the Financial Institutions Act No. 21.526 and its amendments, with the following:

"f) The judicial liquidator shall report on a monthly basis as provided for in the fifth paragraph of article 48 on the status of liquidation, which shall remain at the disposal of the persons concerned in the court in question. "

ARTICLE 11. Replace article 50 of the Financial Institutions Act No. 21.526 and its amendments, with the following:

"Article 50: Financial entities may not request the formation of a preventive contest or their own bankruptcy. The bankruptcy of the financial entities may not be decreed until the authorization to operate by the BANCO CENTRAL DE LA REPUBLIC ARGENTINA is revoked. From that revocation, the provisions of article 52 of this Act shall apply.

When the bankruptcy is requested by circumstances that would make it in accordance with common law, the judges will reject the order and give intervention to the BANCO CENTRAL DE LA REPUBLIC ARGENTINA so that, if appropriate, the bankruptcy request will be made.

If the resolution of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC that provides for the revocation of the authorization to operate, includes the decision to request the bankruptcy of the former entity, the order must be immediately formalized before the competent judge.

In the face of a bankruptcy order made by the judicial liquidator, the judge may issue it without further processing, as set out in the preceding paragraph or as necessary, to apply to the debtor in the terms and time limits established by the Competition and Bankruptcy Act, so that he may invoke and prove as appropriate to his right."

ARTICLE 12. el Replace article 53 (c) of the Financial Institutions Act No. 21.526 and its amendments, with the following:

"c) The depositors ' credits in accordance with article 49 (e), (i) and (ii). "

CHAPTER II

Reforms to the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC

ARTICLE 13. Add as the last paragraph of Article 3 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, adopted by Article 1 of Law No. 24.144 and its amendments, the following:

"Without express provisions in the contrary established by law, they shall not apply to the BANCO CENTRAL OF THE REPUBLIC ARGENTINA the norms, whatever their nature, which with general scope have been dictated or are dictated for agencies of the National Civil Service, of which there are limitations to the capacity or powers recognized by this Organic Charter. "

ARTICLE 14. Incorporate as article 14 (q) of the Organic Charter of the ARGENTIN REPUBLIC BANCO, the following: "(q) Exempt, mitigate or reduce charges in exceptional cases, when mitigating, general and/or particular circumstances are given and pondering the causes that led to compliance." RETURN to Article 15 (e) of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, approved by Article 1 of Law No. 24.144 and its amendments, for the following: "(e) Prepare and forward for the knowledge of the NACIONAL EXECUTIVE PODER and for the approval of the Honorable Senate of the Nation before the 30th of September each year the annual plan of action ARTICLE 15. Replace article 20 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, adopted by article 1 of Act No. 24.144 and its amendments, with the following:

"Article 20: The Bank may make transitory advances to the National Government up to an amount equivalent to the DOCE BY CIENTO (12%) of the monetary base, constituted by the monetary circulation plus deposits in the view of the financial entities in the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, in current account or in special accounts. In addition, it will be able to grant advances to an amount that does not exceed TEN (100 per cent) of the cash resources that the National Government has obtained in the last twelve months. At no time the amount of temporary advances granted, excluding those that are intended solely for the payment of obligations to multilateral lending agencies, may exceed the DOCE by ACCENT (12%) of the monetary base, as defined above. All advances made under this article shall be reimbursed within twelve months. If any of these advances remain unpaid after the expiration of that period, this authority may not be used again until the amounts due have been refunded. "

CHAPTER III

Temporary standard during the emergency period deLey 25.561 de

ARTICLE 16. During the period established in the first paragraph of Article 1 of Law No. 25.561, when general and extraordinary circumstances make it advisable, the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, by decision taken at the Board of Directors by DOS TERCIOS (2/3) of its members, may:

(a) To grant the assistance provided for in article 17 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, adopted by article 1 of Act No. 24,144 and its amendments, to financial entities with liquidity and/or solvency problems, including those within the terms of Article 35 bis of the Financial Institutions Act No. 21.526 and its modifications.

(b) Authorize the integration of the reserve requirements under Article 28 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, approved by Article 1 of Law No. 24.144 and its modifications, with other financial assets, other than those provided for in that norm, and the proportion determined.

(c) Complete or partly renounce the privilege recognized in article 53 of the Financial Institutions Act No. 21.526 and its modifications with the exclusive aim of favouring processes of restructuring financial entities, in defence of depositors, in the terms of article 35 bis.

ARTICLE 17. Derógase el Decreto No 1311 del 22 de octubre de 2001, re-establishcándose la vigencia de los artículos 44, 46 subparagraph (c), 47 y 48 de la Carta Orgánica del BANCO CENTRAL DE LA REPUBLICA ARGENTINA, conforme la texto oportunamente adoptadas por el artículo 1o de la Ley No 24.144.

Please also restore the validity of Decree No. 13 of 4 January 1995.

ARTICLE 18. Replace article 30 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC, adopted by article 1 of Act No. 24.144 and its amendments, with the following:

"Article 30... The Bank is solely responsible for the issue of banknotes and coins of the Argentine Nation and no other organ of the national government, nor the provincial governments, nor the municipalities, banks or other authorities, may issue banknotes or metal coins or other instruments that are likely to circulate as currency. It will be understood that they are capable of circulating as a currency, whatever the conditions and characteristics of the instruments, when:

(i) The transmitter imposes or induces directly or indirectly its forced acceptance for the cancellation of any obligation; or

(ii) They are issued by nominal values below or equal to 10 times the value of the highest-nomination national currency ticket in circulation. "

ARTICLE 19. Replace article 40 of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC with the following:

"Article 40: The provisions of the Financial Administration Act No. 24,156 and its amendments are applicable only to the Bank in terms of the verification that the erogations fit in the budget and the accountability of documentaries which, in time not exceeding UN (1) year, shall submit to the external control entity of the public sector.

The external control of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC will be carried out by the General Audit of the Nation. "

ARTICLE 20. This law shall govern from the day of its publication in the Official Gazette. The amendments to the Financial Institutions Act No. 21.526 and its amendments shall apply to the restructuring processes under Article 35 bis currently under way. The new provisions will also be applied to the liquidating processes of former financial entities, governed by the provisions of Act No. 24,144 and its amendments, currently under way. In no case will the precluded stages be altered. ARTICLE 21. Within the TREINTA (30) days of the publication of this law the NATIONAL EXECUTIVE PODER will announce an Orderly Text of the Organic Charter of the BANCO CENTRAL OF THE ARGENTINA REPUBLIC and the Financial Institutions Act No. 21.526 and its amendments. ARTICLE 22. Contact the national executive branch.

IN THE SESSION OF THE ARGENTINE CONGRESS, IN GOOD AIRES, TO THE VEINTSIETE DIAS OF THE MONTH OF AUGUST OF THE YEAR DOS MIL TRES.

# 25,780

EDUARDO O. CHANGE. . DANIEL O. SCIOLI. . Eduardo D. Rollano. . Juan Estrada.

________

NOTE: The bold text was observed.