ARGENTINA - Citibank Measures: Currency: Fiscal Year: ... Varies from subtropical in the north to sub-arctic in the south ... Citi Transaction Services Latin America & Mexico

A R G E N T I N A

8A R G E N T I N A

COUNTRY OVERVIEW

BASIC DATACapital City:

Land Area:

Population:

Main Towns:

Climate:

Language:

Measures:

Currency:

Fiscal Year:

Time:

Government:

Buenos Aires

2,737,000 sq km

39.8m (2008 mid-year estimate based on 2001 census)

Population (m; 2001)Federal district & Buenos Aires province 16.6 Córdoba 3.1 Santa Fe 3.0 Mendoza 1.6 Tucumán 1.3

Varies from subtropical in the north to sub-arctic in the south

Spanish

Metric system. Among other measures in use are: fanega = 3.77 bushels; quintal = 100 kg

Argentinean peso (Ps). Average exchange rates in 2010: Ps3.90:US$1; Ps5.18:€1

January-December

3 hours behind GMT

Cabinet Chief Juan Manuel Abal MedinDefense Arturo PuricellEconomy & Public Finances Hernan LorenzinoEducation Juan Carlos TedescoEnergy Daniel CameronForeign Affairs & Worship Héctor TimermanInterior Aníbal Florencio RandazzoJustice Julio AlakLabor Carlos TomadaPlanning Julio de VidoProduction Débora GeorgiSecurity Nilda GarréCentral Bank President Mercedes Marcó del Pont

Source: The Economist Intelligence Unit as of February 2012

9Citi Transaction Services Latin America & Mexico A R G E N T I N A

B. POLITICAL STRUCTURE

Official Name Republic of Argentina

Form of StateFederal republic

The Executive The president is head of state and commander in chief of the armed forces; elected for a four-year term; can be re-elected for one consecutive term; the president appoints a cabinet and a chief of cabinet, who can be removed by a majority vote in each chamber

National Legislature Bicameral Congress: 257-member Chamber of Deputies (the lower house), directly elected for a four-year term; one-half of the lower house stands for re-election every two years; 72-member Senate (the upper house); directly elected for a six-year term; three senators are elected per state, two from the leading party and one from the runner-up; one-third of the upper house stands for re-election every two years

Regional Legislatures Twenty-three states and an autonomous federal district Legal System Federal judges appointed by a Council of the Magistracy; Supreme Court system both nationally and in the provinces; national Supreme Court members require the endorsement of two-thirds of the upper house

National Elections October 23rd 2011 (presidential and legislative). Next congressional election to be held in October 2013 for one-half of the lower house and one-third of the upper house. Next presidential election will be held in October 2015

National Government The president is Cristina Fernández de Kirchner. She was elected to a first term on October 28th 2007 and re-elected on October 23rd 2011. She took office for a second term on December 10th 2011

COUNTRY OVERVIEW

10A R G E N T I N AA R G E N T I N A

Main Political Organizations Government: Frente Para la Victoria (FV). The FV is formally a faction of the Partido Justicialista (PJ, the Peronist party). The Kirchners built the FV into a cross-party alliance, including some Unión Cívica Radical (UCR) members, although some of these figures have recently distanced themselves from the government Main opposition: Coalición Cívica (CC); UCR; Unión Peronista and other PJ dissidents; Propuesta Republicana (Pro; Afirmación para una República Igualitaria (ARI); Partido Socialista (PS); and several provincial parties

President Cristina Fernández de Kirchner Vice-president Amado Boudou

The president, Cristina Fernández de Kirchner, was re-elected by a vast margin in October 2011 and has a strong mandate for her second term, but she also faces huge challenges in the form of a slowing global economy and rising economic distortions at home that will need to be addressed. The president has the advantage of a compliant Congress: her Frente para la Victoria (FV), a leftist faction of the Partido Justicialista (PJ, Argentina’s dominant Peronist party) regained a congressional majority in the October polls. This will facilitate the passage of difficult adjustment measures. However, political loyalties are notoriously weak in Argentina, and if the economy does deteriorate beyond the Economist Intelligence Unit’s current forecasts, Ms. Fernández will have a relatively small window of opportunity to react before her backers begin to fall away (as occurred in 2007-08, when there was a slew of defections from the government bench) and policymaking becomes much more complicated. This would create strong risks to political stability, owing to weak institutions and a perception, which persists a decade on from the 2001 crisis, that governments can be pushed out of office with enough pressure from politicians or protesters. However, even under our benign baseline scenario, some difficult steps to try to rein in inflation seem necessary, and increased conflict, particularly with Argentina’s powerful labor unions, appears likely in the next year.

With the global economic outlook remaining uncertain and protectionist measures by Argentina and its trade partners on the rise, the potential for trade and diplomatic disputes will remain high in the forecast period. Argentina has already shown itself willing to provoke disputes with key trade partners such as China and Brazil in pursuit of its own trade policy goals, and we do not expect this to change in the near term. There will, moreover, be periodic tensions with multilaterals and with the US government over Argentina’s lack of compliance with the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) and with the IMF’s articles of agreement. As the 30th anniversary of the Falklands War

C. POLITICAL OUTLOOK 2012 – 2016

COUNTRY OVERVIEW

11Citi Transaction Services Latin America & Mexico A R G E N T I N ACiti Transaction Services Latin America & Mexico A R G E N T I N A

approaches, and with Argentina continuing to press its sovereignty claims at the UN and with regional bodies such as the Mercado Común del Sur (Mercosur, the Southern Cone customs union), increased diplomatic tensions with the UK appear likely, although any sort of military conflict remains extremely unlikely. On a positive note, a deal to restructure defaulted Paris Club debt could be struck in the coming year. However, in general, failure to meet international commitments will continue to impair Argentina’s image within the G20, where it is marginalized.

Discrepancies between national inflation data produced by the Instituto Nacional de Estadística y Censos (INDEC) and those produced by private and provincial sources persist. In December INDEC reported a rise in prices of 0.8% (throughout 2011, monthly inflation was in the narrow range of 0.6-0.8%), bringing 12-month consumer price inflation to 9.5%. This figure is less than half that compiled by private consulting firms. The so-called “Inflación del Congreso”, which is an average of the estimates of the main private consultancies and is published by a congressional committee), came in at 22.8%, while in Santa Fe province, for example, the statistics agency reported inflation of 20.9% in December. For as long as this state of affairs persists, the INDEC data will remain discredited. Nominal wage rises of over 25% in 2011, and the government’s own stated aim of keeping wage rises under 20% in 2012, imply that inflation is well above the official figure. The official data do at least coincide with alternative series with regards to the key drivers of inflation. Reflecting a continued decline of international soft commodity prices in recent months, food and beverage price inflation has eased, from 13% in January 2011 to 7.6% in December. But for other goods and services, inflation has continued to accelerate rapidly, even according to the official series. These include clothing (with 12-month inflation at 21.2%), education (16.1%) and healthcare services (13.4%). The upward drift of inflation expectations and wages, and the continued boom in private consumption are having an impact, as, in the case of clothing in particular, is the protectionist import license regime. The maintenance of subsidies to keep utility fees frozen continued to help offset the rise in other items: transport and communications prices rose by just 7.7% year on year in December, while lodging and basic services prices increased by just 6.4%. However, with the government now in the process of reducing subsidies, price pressures here are set to increase as well in coming months.

D. ECONOMIC PERFORMANCE

COUNTRY OVERVIEW


E. ECONOMIC FORECAST

Source: The Economist Intelligence Unit as of February 2012

COUNTRY OVERVIEW


COUNTRY OVERVIEW

Economic Growth

We expect the high rates of GDP growth that Argentina has recorded in the past two years, on the back of expansionary macroeconomic policies, to give way to an annual average growth rate of 3.7% in 2012-16 as economic distortions deter investment (a benign scenario that depends on commodity prices remaining supportive). After a series of downward revisions to our forecasts in recent months, we now expect growth of only 3.5% in 2012, as concerns grow over export competitiveness and as business and consumer confidence is knocked by the government’s imposition of capital and foreign-exchange controls in an attempt to stop capital flight. There are downside risks to our forecasts, including the effects of drought on Argentina’s large agriculture sector and the potential fallout from a global recession prompted by a deepening of the euro zone crisis on Argentina’s key trade partners, Brazil and China, or a sharp drop in commodity prices. We do now, however, also see possible upside risks, with momentum still firm going into 2012, growth still holding steady in China and the outlook for Brazil, particularly late in 2012, now appearing brighter after a slowdown in late 2011. For most of the past year, private consumption has been supported by transfers, subsidies, easy access to credit and still-positive real wage growth. Fixed investment has been spurred by real peso appreciation, growing capacity constraints and prohibitively high growth in wage costs (which increase incentives for investment in equipment rather than labor), as well as strong profitability in recent years, which has boosted firms’ capacity to self-finance investment. In the coming year, however, we expect consumption to be hit by falling real wage growth (although it will remain positive), cuts in subsidies, and rising interest rates (although remaining subsidies and transfers will provide something of a floor).


COUNTRY OVERVIEW

Investment, meanwhile, will be hit by uncertainty over prices and utility tariffs, import, foreign exchange and capital controls, and the legal and regulatory environment. At the same time, the effects of real peso appreciation on external competitiveness and the rising cost of labor will be seen in the increasingly negative contribution of the external sector to growth. Although export volumes will be supported by the still-positive outlook for commodities, overall domestic demand is likely to be met increasingly through imports rather than domestic production.

On the supply side, agriculture and manufacturing will continue to be key contributors to growth. The incentives from still-high international prices should help to offset the unfavorable domestic environment for investment in agriculture, and we expect continued firm growth in the medium term, after a drought-affected 2012. However, given the persistent risk of intervention, agricultural production will remain below Argentina’s vast potential. Still-solid medium-term growth prospects in key export markets such as Brazil will also be supportive of manufacturing output. However, manufacturing is highly sensitive to trends in the real exchange rate, and with substantial real peso appreciation expected to continue, manufacturing output is forecast to slow gradually over the forecast period.

Inflation

Although high inflation is at the heart of the government’s economic challenges, the policy environment will not be conducive to a reduction of price pressures. Inflation has trended mildly downwards in recent months in response to a moderation of international commodity prices, but even according to official data, which are thought to understate substantially the real level of inflation, consumer price inflation remains among the highest in the emerging markets, at 9.5% at end-2011. This reflects a combination of booming demand, driven by loose macroeconomic policy, and continued supply constraints, as government intervention has resulted in falling production of key foodstuffs such as beef and more difficult access to cheap imported clothing and other consumer goods. The government’s response to the inflation problem, including the reimposition of price and export controls, has instilled little confidence in its ability to control price rises. Our assumption of a continued moderation of commodity prices in 2012-16 should produce some modest disinflation, as will a gradual weakening of domestic demand. However, with the government mostly relying on ad hoc agreements at the firm level to try to control prices, with peso depreciation set to accelerate, and with the ongoing reduction of subsidies set to increase utilities tariffs, inflationary pressures will remain high.


Meanwhile, serious doubts will remain about the official data on which our forecasts are based. The official 9.5% figure for end-2011 compares with provincial data (which are more independent than at the national level) and private surveys that show inflation at around 20-25%. Although the government has recently consulted with the IMF on the elaboration of a new index, it remains unlikely that a more reliable measure will be introduced in the short term. The difficulty of gauging the real rate of inflation is likely to remain a major source of concern among investors.

Exchange Rates

Pressure on the peso has eased in recent weeks, but the underlying competitiveness problems and continuing speculation of a peso devaluation persist. The monetary authorities appear determined to prevent substantial peso adjustment and seem likely to tighten controls and, as much as is possible, use the reserves to back the currency, in order to engineer a steady moderate nominal peso depreciation. We expect a fairly rapid nominal depreciation of the peso against the US dollar in 2012, of around 10%. However, in a high-inflation environment, real peso appreciation will continue, increasing the risk of a sudden, sharp adjustment at some point in the forecast period. Pressure on the peso is evident in the parallel market, where the rate breached the psychological Ps5:US$1 mark immediately after the imposition of foreign exchange controls. Although it has since come down slightly from that level, the black-market premium is still high. A tightening of controls in the face of persistent depreciation pressure appears likely, shifting more transactions to the parallel market. There has been some local speculation about a shift to a dual exchange-rate system. On balance, given the distortions this would create, we do not expect that this will happen, but the risk cannot be discounted.

External Sector

Our forecasts suggest that the current account, which has been in surplus ever since the 2002 maxi devaluation, will be in deficit throughout 2012-16. This is mainly the result of a smaller trade surplus, as growth in the import bill outpaces growth in export earnings, reflecting the real appreciation of the peso. We do not now expect any strong rebound in portfolio investment or foreign direct investment (FDI) post-election, as economic distortions will deter some inward investment and encourage further capital flight. At the same time, reserves coverage will be weakened by the government’s use of reserves to shield the peso and to repay external debt. The Treasury is authorized to use close to US$6bn in reserves for external debt repayments in 2012. In this context, concerns about the robustness of the reserves position will remain high, as will the risk of even stricter capital, trade, or foreign-exchange controls.

COUNTRY OVERVIEW


COUNTRY OVERVIEW


COUNTRY OVERVIEW


COUNTRY OVERVIEW


COUNTRY OVERVIEW


COUNTRY OVERVIEW


COUNTRY OVERVIEW


Argentine Financial System is composed by 64 banks in Argentina, where 12 of them are public banks, 51 private local banks and 21 are International Banks. Within international banks, only 9 have commercial branches, being the rest 2nd floor banks.

Citibank Argentina has been operating since 1914. In fact, Argentina was Citibank’s first branch established outside the United States. Since then, the bank has committed to grow together with the country through the diverse political and economic events of the 20th century. Today there are 70 Citibank branches throughout the country.

Location of Branches (Province/City)

Buenos Aires City & Metropolitan Area: 46 branchesOther locations: 24

Services Offered to Citibank Clients

• Loans• Trade Services• Trade Finance• Treasury• Cash Management• Capital Markets• Corporate Finance

BANKING SYSTEM

F. BANKS IN ARGENTINA

G. CITIBANK IN ARGENTINA


An automated clearinghouse ACH was be implemented during the second quarter of 1999, initiating a process of significant changes in the way clearing is performed today.

2007

Physical checks truncamiento: is the no-sending physical checks.Image and data exchange for checks larger than AR$ 10,000.-.Image based processing.

All checks are electronically delivered to the corresponding clearinghouse. The National ACH electronically connects all banks in the system, allowing automatic exchange of checks, direct debits and funds transfer orders. However, for security reasons, checks exceeding AR$ 10,000.- require not only electronic information but also images delivery, and physical documentation is no longer required. The whole country has now a single compensation period, this period is 48 hours.

Banks agree upon wire transfer procedures on an individual basis, and therefore no regulation exists for this type of transaction. In November 1997 an electronic system allowing electronic funds transfers between banks was implemented, so banks may make same day transfers to other banks upon receiving payment instructions from its clients. However, transaction fees for this service are still high in international terms.Datanet is the electronic funds transfer (E.F.T.) network operating providing clients with electronic connection to approximately 44 banks in the country (covering approx. 98 % of deposits in the country).

CLEARING SYSTEM

A. AUTOMATED CLEARINGHOUSE

B. WIRE TRANSFERS

Cut-off Time Funding Date Client Db./ Cr. Date Client Value Date

Book Transfers (LCY) 19.00 hrs Day 0 Day 0 Day 0

Interbank ACH transfers (LCY)

12.00 hrs payroll / 15:00 hrs supplier Day 0

Day 0 (it’s a batch process beneficiary availability D+1)

Day 0

Interbank Immediate transfers (LCY) 18.00 hrs Day 0 Day 0 Day 0

Direct Debit 17.00 hrs Day 2 Day 2

Check Deposits 17.00 hrs Day 2 Day 1


This will allow clients to order Electronic Funds Transfers (EFT) from and to any bank in the network. Transactions are settled at the end of the day for the net amounts (net settlement), through the recently implemented EFT facility mentioned above (which allows banks to perform (E.F.T.) (an “Argentine CHIPS”).

EFT Process

1. From the internet Datanet application, customers send the instruction to the network.2. The network delivers the instruction to the debit bank.3. The debit bank validates the instruction and approves it.4. If approved, the network sends the instruction to the credit bank.5. The credit bank approves the instruction.6. Datanet incorporates bilateral limits between banks: any transaction exceeding the limits will be automatically rejected. This will represent a limitation when a company operates with small banks that have correspondingly small limits unless the bank collateralizes cash guarantees. These limits, and other instruments, imply more security in the network and irrevocability of transactions.

The FX market is wholly controlled by Argentinean Central Bank. Several controls exist on the purchase and sale of foreign currency.

C. ELECTRONIC FUNDS TRANSFER

CLEARING SYSTEM


Main Controls Can Be Summarized as Follows:

•All exports proceeds from goods (FOB or CIF, appropriate) and services must be converted into Argentine Pesos through the local FX market called “Mercado Unico y Libre de Cambio” (MULC). Argentine Pesos then must be credited into exporter’s local banking account.• Import and export financings are allowed but highly regulated.•Exporters have within 60 to 360 days (depending of goods shipped) from the date the loading permit is approved to collect proceeds and settle a foreign exchange contract through MULC, otherwise tax exemptions are lost and exporters will face legal charges under “Ley Penal Cambiaria” (Exchange Criminal Law). Central Bank has provided that the exporter has 120 additional business days to effectively settle foreign exchange receipts.•Before entering into a commercial contracts with international counterparties, residents must seek governmental approval for import and certain service cross border payments (DJAI – “Declaración Jurada de Anticipo de Importacion” – and DJAS – “Declaracion Jurada de Anticipo de Servicios”)•Proceeds from services provided to non residents must be converted into local currency within 15 days from collection date, otherwise local service providers are subject to Ley Penal Cambiaria as well.• Intercompany cross border payments of certain services above $100,000 require Central Bank authorization.•Any type of financing (loan, bonds, etc) granted by a non resident to a resident must be converted into local currency through MULC.•Before closing any FX contract, customers need to submit supporting documents to evidence validity of the transaction.• Inflows other than Trade related or debt above $2,000,000 a month are subject to a 1y mandatory non interest bearing cash reserve of 30%.

For further information on Argentine foreign exchange market please refer to Argentina Central Bank website. The below linkage will bring you the latest english summary of local regulations available which is updated from time to time:

http://www.bcra.gov.ar/pdfs/resumencambios/ultimocomunicado2010i.pdf

On February 2002 the economic authorities implemented a program based on free float currency, since then local Currency value floated from 1 to 0.33$ per 1 United state dollar (Ar$ 0.33 = US$ 1)

A. MARKET RATES

FOREIGN EXCHANGE CONTROLS


The forward market is very small and is not common practice. The Spot Market is more commonly used.

Income TaxThe corporate income tax rate is 35% of taxable income.

Withholding Tax

Interest on credits obtained abroad has a withholding tax of 15.05%. Withholding tax on interest paid to non-residents for Savings accounts or certificates of deposit is 15.05% (except for residents of countries that do not tax foreign income, such as Uruguay).

Fees, Duties and Taxes

Presently, cash dividends in Argentina are not taxable as long as they do not exceed the taxable income. Effective 4 January 1999, the Argentine Tax Reform had, among others, the following effect: There is a 35% withholding tax on the portion that exceeds the taxable income. The portion of cash dividends that exceed the taxable income will be distributed proportionally among the beneficiaries and the tax to be withheld will be calculated accordingly to its participation over the total income distributed.

There are no capital gains taxes for foreign investors. Interest earned by a foreign beneficiary is tax exempt if it originates from negotiable instruments falling within the provisions of Obligaciones Negociables Law 23,576 or from government securities. Interest arising from privately placed debt instruments is subject to a 15.05% withholding tax to be withheld directly by the issuer of the paying agent. Interest on time deposits, current accounts, and accounts in dollars is tax exempt, provided that there is no transfer of income to foreign governments, for which a certification is required. If there is a transfer of income to a foreign government, it is subject to a 15.05% withholding tax. Transfer of income to a foreign government is generally defined as the investor subject to income tax by the country of their domicile.

Through Law 23.966, emended through Law 25.585, the Argentinean government created the Tax on Personal Assets. This tax is assessed on specific assets belonging to individual persons, whether domestic or foreign domiciled, as of 31 December of each calendar year. The tax rate is 0.5% of the value of the assets. Law 25.585 designated


B. FORWARD MARKET

C. TAXES


local companies that issue stock as the responsible paying party for the tax owed on the shares which are owned by local and/or foreign individuals and entities. To this effect the law presumes – without admitting evidence to the contrary – that shares held by entities, corporations, establishments, which are domiciled abroad indirectly belong to individuals. Then the issuer, who has to pay the tax anyway resorting to its own resources, is entitled to recover the expense from the foreign investors (e.g.: withholding the tax from dividend distributions or claiming the shareholder to pay them back the tax burden faced by the issuer). Professional and financial services, including custodial services and brokerage house commissions are subject to a 21% VAT.

Duties and Taxes

(1) 0.5% over the value of assets held as of December 30 of each year calculated according to fiscal authorities regulations.

Tax Treaties

Argentina has signed “tax treaties” to avoid double taxation with several countries such as Austria, Brazil, Chile, Spain, France, Italy, Germany, Bolivia, Canada, Finland, Great Britain, Sweden, Australia, Belgium, Switzerland, Denmark, Norway and Netherlands. . Under such treaties, in most of the cases there are special rates for different types of income obtained by the counterparties resident in each one of the countries. In addition the local tax authorities have issued local regulations regarding formal requirements that must be Tax treaty countries achieved in order to make the tax benefit finally applicable. For a specific list of tax treaty provisions, contact Citibank Argentina. However, it must be pointed out that, under present rules, and setting aside the treatment established in the treaties, yields and capital gains related to “capital markets” products, i.e., public securities, negotiable instruments publicly placed, shares, etc., are widely benefited with tax exemptions, especially for offshore investors. It must be noted that, in regards to Income Tax only, such regulations related to “capital markets” products do not make any difference when referring to a foreign beneficiary, between a “beneficial owner” and an “owner of record.”

Duties and Taxes Equity Fixed Income

Capital Gains Tax Not app. Not app.

Stamp Duty Not app. Not app.

Tax on Persona Assets 0.5% (1) Not app.



TRADE REGULATIONS

Cash dividends in Argentina are not taxable as long as they do not exceed the taxable income.

In July 1st 2010, Argentine Central Bank (BCRA) introduced SEPAIMPO through Commnunication A-5060 (as amended from time to time) an electronic database with all import transaction details at custom level, necessary to process any import payment. The SEPAIMPO system enables the BCRA to monitor: (a) payments associated to import clearance formalization, and (b) the goods effectively entering the country that were partly or fully paid before the customs registration date.

Communication A-5274 from BCRA gives the framework for import transactions and related financing.

Nowadays, import payments can be processed electronically by providing image copies of commercial documents (FX contract, invoices, B/L, etc) and following SEPAIMPO mechanism.

No import transaction can be cancelled before 5 business day from original maturity date.

All exports proceeds from goods and services must be converted into Argentine Pesos through the local foreign exchange market called “Mercado Unico y Libre de Cambio” (MULC). Argentine Pesos then must be credited into exporter’s local banking account.

Exporters have within 60 to 360 days (depending of goods shipped) from the date the loading permit is approved to collect proceeds and settle a FX contract through MULC, otherwise tax exemptions are lost and exporters will face legal charges under “Ley Penal Cambiaria” (Exchange Criminal Law). Central Bank has provided that the exporter has 120 additional business days to effectively settle foreign exchange receipts. Through Communication A-3493, BCRA controls that exporters comply with this obligation on timely manner. For those exporters that receive an advance payment (from buyers ) or pre export financing, communication A-3609 also control that proper shipments are used to cancel these obligations.

Pre export and export financings are allowed but highly regulated under Communication A-4443 mainly.

A. IMPORT REGULATIONS

B. EXPORT REGULATIONS


TRADE REGULATIONS

It is mandatory to settle through the foreign exchange market 100 percent of foreign exchange receipts from the export of services. All exports of services rendered by residents to nonresidents are covered by this obligation.There are 15 business days to settle income from services rendered to non residents, counting as from the date of collection abroad or domestically, or their crediting in foreign accounts.

For further information on Argentine foreign exchange market please refer to Argentina Central Bank website. The below linkage will bring you the latest english summary of local regulations available which is updated from time to time. For Export matters please refer to Section 1 (a) and on Import Section 2 (a) and 2 (b).http://www.bcra.gov.ar/pdfs/resumencambios/ultimocomunicado2010i.pdf

ALADI (“Association of Latin American Integration”)

Imports effected under the ALADI agreement are exempt from the requirement to obtain an import license (or an authorization to buy foreign currency). The use of the ALADI payment system is mandatory for imports and exports with the countries who are members of ALADI (Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Paraguay, Peru, Venezuela, and Uruguay). Additionally, there is a bilateral free trade agreement in effect with Colombia.

MERCOSUR (Trade Agreement between Argentina, Brazil, Uruguay, Paraguay)

In 1991, Brazil, Argentina, Uruguay, and Paraguay signed the Treaty of Asuncion that created the outline for information of the Mercosur. Since then tariffs among these countries have been reduced drastically and trade within the block has grown by over 25 percent. In 1995 Mercosur presidents ratified a Common External Tariff (CET) for 85 percent of the goods traded in the block, thus paving the way for a partial custom union. The CET schedules were established in January of 1995, with duties ranging from zero to 20 percent. The CET initially will cover 85 percent of traded products (approximately 9,000), and excludes capital goods and computer and telecommunications equipment and technology until the year 2001 and 2006, respectively. The agreement includes a list of exceptions from the CET on 300 product categories for Argentina, Brazil and Uruguay and 399 for Paraguay. Negotiations to bring Chile and Bolivia as members of Mercosur are under way.

C. REGIONAL TRADING ASSOCIATIONS


INVESTMENT OPPORTUNITIES

Overnight investments are not available at present due to restrictions on the minimum tenor of investments. Money market fund legislation has been approved.

As from April 2001, corporations are no longer allowed to open savings accounts. This product was replaced by a special current account for corporations, very similar to the old savings accounts (including interest rates), however, since May 2010 interest rates on sight deposits are no longer allowed

The Government decommissioned this instrument for institutional investors after the debt restructuring process and it is now used only for Intra Public Sector transactions.

Foreign currency time deposits are available.

Commercial paper is also available in the local market. Locally incorporated & cooperative firms may issue commercial paper. Instruments are issued with a minimum of 90 days, a maximum of two years, denominated in either dollars or pesos, are not tax-exempt, & traded on the local stock exchange. However, it is important to remark that latest issuances where 100% in pesos.

There are corporate bonds available in the market. There is also a special program to issue corporate bonds for small and medium-sized businesses (Pymes). There are convertible corporate bonds, which may be converted into a certain amount of equity of the issuing company.

There are national, provincial and municipal government bonds denominated either in USD, ARS or ARS adjusted by the CER (Coeficiente de Estabilización de Referencia). The terms and conditions of those instruments may vary from one issue to another.

A. NEGOTIABLE CERTIFICATES OF DEPOSIT

B. T-BILLS

C. TIME DEPOSITS

D. COMMERCIAL PAPER

E. CORPORATE BONDS

F. GOVERNMENT BONDS


INVESTMENT OPPORTUNITIES

Trust certificates and asset-backed securities are also available in the market. As part of the National Debt Exchange that took place in early 2005, the Argentine Government issued GDP-linked units that were originally issued as a single unit attached to the underlying Par, Discount or Quasi-Par during a 180 days period. On November 30, 2005 those units were detached from its original bond and began to trade separately.The GDP-linked units will make payments contingent upon the performance of Argentina’s GDP and subject to certain conditions.

The Buenos Aires Stock exchange is the primary market (Rosario, Cordoba, La Plata and Mendoza also have exchanges).

Bolsa de Comercio de Buenos Aires (Buenos Aires Stock Exchange)

Hours: Monday-Friday 10:00 to 17:00 (April through October) and 11:00 to 18:00(October though April).

Instruments Traded: Equities and Bonds

Market Capitalization: US $395 billion (equities)

Companies Listed: 66

Turnover: Fixed income at MAE $7 billion per month; Equities (Merval) $300 million per monthCompanies are usually closely held, and between 70% and 90% stock/equity ownership/participation is normal. Before deregulation, brokers’ commissions were limited to 1%. Today, commissions are usually between 0.5% and 1% for large foreign players. The major market makers are mutual funds, foreign investors, corporate, and retail markets. Listing requirements for the stock exchange include both approval from the Comisión Nacional de Valores for the public offering, and approval from the Stock exchange for quoting.

G. OTHER DEBT INSTRUMENTS

H. STOCK MARKET


TRADE SERVICES

In Trade Business, we are prepared to offer a wide range of products and tailored made solutions to our customers

• Payments and collections under Open Account. Advisory on local regulations• Collections – CitiDirect• Letter of Credit (including Stand By) – CitiDirect. Club and Syndication deals.• Discount of Letter of credits• Local bank guarantees (Fianzas)• All regulatory controls imposed by Argentine Central Bank (Com A-3493, A-3602, A-3609, A-4237 and A-5060).• Citi Argentina ranks first as processing bank with 20% market share of argentine trade flows according to Argentine Central Bank reports.• Electronic delivery and transactional solution where customers can submit supporting documents and close FX contracts through Citi FX Pulse, Citi’s worldwide trading platform.

• Import and pre export financing in line with local regulations• Short term working capital to exporters or to their suppliers.• Structured deals with assignment of export proceeds• Export Credit Agencies / Multilateral Agency financings

Through our Supply Chain Finance business we develop and provide innovative solutions to our customers’ value chain. Our global footprint allow us to replicate best practices for each industry throught the word while supporting our clients locally and internationally.

We focus in understanding our customers’ value chain and their own needs to develop customized solutions.

Receivables Financing

Through this kind of structures we provide our customers with working capital financing while optimizing their balance sheet ratios and in some cases partially off-setting credit risk in their receivables portfolio.

A. TRADE SERVICES

B. TRADE FINANCE

C. SUPPLY CHAIN FINANCE


TRADE SERVICES

Benefits for Seller

•Sales Growth•Balance Sheet Management, improve DSO•Risk Mitigation & Bank Limit Utilization•Outsourcing of receivables management•Reduced Administration

Supplier Finance Programs

We purchase our customer’s account payables allowing our customer’s suppliers to obtain a steady flow of working capital with lower cost of funds.

Benefits for Buyer

• Improvement of commercial terms at no cost•Better accounts payable control •Strengthen supplier relationships•Potential for rebates and discounts•Benefits for Supplier•Liquidity management through early payment•Positive working capital benefits•Full Payment transparency


CITI SOLUTIONS AND SERVICES

CASH MANAGEMENT SERVICES

There are no restrictions on non-residents in holding accounts in Argentina, however non-residents must have a CDI (local tax id for non-residents).

Resident Current AccountsAllowed in local currency. Checks may be issued from these accounts.

Resident Special Current AccountsSimilar to a Savings Account, no checkbook allowed.

Non-Resident AccountsAllowed in local or foreign currency.

Foreign Currency AccountsResidents and non-residents can open foreign currency accounts, which are Special Current Accounts with no checkbooks.

Currency ConvertibilityIn general terms, the Argentine Peso (ARS) can be converted into any foreign currency. However, repatriation and inflow of funds requirements apply. Repatriation restrictions: Up to USD 500,000 limit per month within the whole financial system, provided that certain conditions are met. A 30 percent cash reserve requirement for funds entering the country, as established in 2005, is applicable to some transactions, direct investments are exempted of the cash reserve requirement.

Citi offers clients payment solutions designed for both local and overseas payments. Clients use CitiDirect® Online Banking for payments and may select any combination of services needed to meet both domestic and international payment needs.

Local PaymentsPAYLINK

PayLink is recognized in the market as the most advanced and secure payment system in Argentina with a 50% market share.

A. CITIBANK’S ACCOUNT SERVICES SOLUTION IN ARGENTINA

B. CITIBANK’S PAYMENT SOLUTIONS IN ARGENTINA



• PayLink Checks (Customer Checks/Deferred Payment Checks CPD): automatically available to be picked up through our unique dedicated ATMs.• PayLink Online Transfers (Interbanking Datanet): for Suppliers and Payroll payments• PayLink Direct Credit (ACH Coelsa): Overnight electronic credits for Suppliers and Payroll payments• PayLink Online Book Transfers (Citi): for Suppliers and Payroll payments holding a Citi account

Value added information attached to payments: withholding taxes certificates, information about paid invoices. Beneficiaries can access information online via Online Payments Channel or by phone.Flexibility in checks delivery: via ATMs, Citi branches, Post branches, mailing to payer or to beneficiary, etc.

Citi’s integrated receivables solutions suite simplifies the collection of paper and electronic payments and expedites the conversion of our clients’ receivables. Our solutions employ the latest processing and information technologies in order to provide clients with a transparent receivables, and provide them with the information and insight needed to make informed and smart business decisions. Citi offers receivables products that enable effective order-to-cash cycle management and working capital optimization. Through our receivables products, Citi provides clients with reductions in Days Sales Outstanding (DSO), reductions in collection costs, prompt remittance of critical information to improve cash application/reconciliation and integration with treasury systems to improve cash flow forecasting.

Products• SpeedCollect: Paper-based identified collection service throug CitBranches (70 branches). Payee and Invoice information capture through barcode readers or inputted manually by our specialized teller. and invoices are identified Supports most usual type of payments (Cash (LCY and USD), Checks and Deferred Checks) .• Cash Deposit Machines (CDM): 170 exclusive Cash Deposit Machines with a customizable touch-screen receivables process configuration flow, on Line real time settlement for cash deposits. Recognition and processing of bunch bill notes (local and foreign currency) as well as checks (local currency). Includes Bar-Code reader and manual input front end.

C. CITIBANK’S COLLECTIONS SOLUTIONS IN ARGENTINA

D. INTERNATIONAL CASH MANAGEMENT


• Supports most usual type of payments (Cash (LCY and USD), Checks and Deferred Checks).• Network Partner – Rapipago: Collection network owned by GIRE S.A. with a presence throughout the territory of Argentina; the network is formed by agents with the ability to process substantial transaction volumes. Over 3500 agents throughout Argentina with extended timeframe, available from 8:00 AM to 6:00 PM. Supports only Cash in LCY.• Banelco Deposits: Collection service through magnetic cards delivered bythe Company to their clients and/or sellers in order to deposit cash and checks at Banelco ATMs network (over 4500 ATMs) . Supports Cash (LCY) and Checks. Service available 24x7• Remote Deposit: In 2011, Citi introduced a new electronic check deposit channel for Corporate clients with which they are able to scan checks from remote locations to Citi´s clearing processing center. This new service eliminates the need of preparing and delivering documents to the different branches every day.• Direct Debit: Electronic Collection System that allows clients instruct Citi to debit the debtors account at Citi or any local financial institution, based on written authority by the customer• EIPP - Electronic Invoice Presentment and Payment is an internet-based collection channel by which the Companies can manage and present invoices electronically. Payers are able to prepare their payment order through a simple process and pay them with electronic or paper based payment methods • Checks administration and custody• Check Clearing Advances.• Pagos BtoB: Online settlement for multi-bank centralized collection system by which payees can pay their invoices over the Internet. • Client Pick Up Services: Door-to-Door Service to Pick-Up and Delivery Cash, Checks and financial documents.

PAPs are in NY. In Argentina we act as referral for the following products:

• IPA (International Payment Acct.): IPA is an offshore cash management solution consisting of comprehensive Payment and Receivables capabilities, Liquidity and Investment Options managed via Online Banking and supported by local service.• Non-resident account opened in New York (USD) and London (USD, EUR, GBP, CHF).• Sweep Investments: Overnight automated investment option (Nassau)• Time Deposit´s / Overnight Investments: Investment options through CitiService desk.• Money Market Funds - Online Investment (OLI): MMFs are mutual funds that invest in a diversified portfolio of high-quality, short-term money market instruments. They provide the investor the benefit of having exposure to the yield curve while maintaining daily liquidity.• Worldlink: This payment service offers a one-stop solution for initiating and managing payments in more than 135 currencies through a single account and providing greater flexibility and ease than ever before to make cross- border payments efficiently and cost- effectively.



MARKET GUIDE FOR TREASURY

Allowed —No materialrestrictions

Operating Accounts1,2 Non-Residents ResidentsOnshore local currencyOnshore foreign currencyOffshore local currency Offshore foreign currency

Overdrafts3 Non-Residents ResidentsOnshore local currencyOnshore foreign currency

Interest-Bearing Accounts4 Non-Residents Residents Onshore local currency operating accountsOnshore foreign currency operating accounts

Overdrafts3 Non-Residents ResidentsOnshore local currencyOnshore foreign currency

Time Deposits5 Non-Residents ResidentsOnshore local currencyOnshore foreign currency

Domestic Notional Pooling Non-Resident to Resident Residents OnlyOnshore local currencyOnshore foreign currency

Non-Residents onlyOnshore local currencyOnshore foreign currency

Inter-company Lending6

Non-Resident to Resident Resident to Non-residentOnshore local currencyOnshore foreign currency

Non-Residents Only Residents OnlyOnshore local currencyOnshore foreign currency

FX Convertibility/Transferability• Local Currency is not freely convertible. AR has a complex set of rules regarding FX transactions. Controlled FX market by• the CB. Central Bank requires exchange declarations for any FX transaction.• Subject to Central Bank regulations. Declaration by the company on the reason and code for entering into an FX transaction and Commercial Banks have to report it to Central Bank.

Allowed —Straightforwardregulations,approval orlicense

Allowed —Challengingregulatoryapproval orlicense

Allowed —Subject to acomplex setof rules

StrictlyProhibited


MARKET GUIDE FOR TREASURY

Central Bank and Other Regulatory Requirements• FX market restrictions and conditions to be met.• Foreign currency brought into Argentina is subject to a 30% withholding by means of a no-interest U.S.-dollar-denominated one-year bank deposit (some exceptions may apply). Deposit cannot be used as collateral.

Tax and Transfer Pricing Considerations• Tax on financial transactions (checks): 0.6% on any amount debited or credited to bank accounts. Tax exemption may apply (for example, when account is used only for financial investments in Argentina).• General Stamp tax on any agreement signed in Buenos Aires City: 0.8% (rate may vary on jurisdiction).

Other Payment and Clearing Consideration for Treasury• A complex set of rules are in place for residents and non-residents, restrictions at the moment to operate into the economic market.• Export proceeds must be repatriated to local account in Argentina.• Equity infusions and offshore loans received by an entity in Argentina must be nationalized. There are restrictions on netting and payments for imports must be done directly to the beneficiary.

For more information, please visit www.transactionservices.citi.com.

Notes:1 No checkbooks for local US$ accounts.2 Foreign entities have to be registered with Public Registry of Commerce in Argentina in order to open accounts in the country. Once duly registered, are considered residents3 Overdrafts only for AR$ checking accounts.4 Interest bearing not allowed since May 2010 (Com. 5068 BCRA).5 Minimum term: 30 days.6 Considering the complexity of the local financial market and regulations, and that the bank does not always participate in these, the customer must first discuss with its own tax and legal advisors.


CONTACT INFORMATION

Sales Heads

Industry Sector Heads

Carolina JuanTreasury and Trade Solutions Client Sales ManagementLatin America & Mexico HeadCiti Transaction ServicesEmail: [email protected]: + 57 (316) 743 - 9347Of. Phone: +57 (1) 639 - 4026

Industrials SectorInes Vargas BarreraEmail: [email protected]: +52 (181) 8366 - 5190Of. Phone: +52 (81) 1226 - 8525

Branding, Consumer and Healthcare SectorOscar MazzaEmail: [email protected]: +1 (305) 588 - 9396Of. Phone: +1 (305) 347 - 1336

Technology, Media and Telecom SectorGabriel KirestianEmail: [email protected]: +54 (911) 3301 - 4826Of. Phone: +54 (11) 4329 - 1516

Energy, Power and Chemicals SectorPeter LangshawEmail: [email protected]: +55 (11) 6183 - 6958Of. Phone: +55 (11) 6183 - 6958

Public SectorJorg PaascheEmail: [email protected]: +52 (1) 55 5453 - 0103Of. Phone: +52 (55) 2226 - 6020Based: Mexico DF, Mexico

Non Bank FI Sector (NFBI)Ricardo DessyEmail: [email protected]: +54 (911) 6641 - 9752Of. Phone: +54 (11) 4329 - 1471Based: Buenos Aires, Argentina

BrazilAdoniro CestariEmail: [email protected]: +55 (11) 7130 - 9447Of. Phone: +55 (11) 4009 - 7838Based: Sao Paulo, Brazil

Central AmericaEvelin MadridEmail: [email protected]: + 506 8701 - 4529Of. Phone: +506 2588 - 7541Based: San Jose, Costa Rica

MexicoMiguel YtuarteEmail: [email protected]: +52 (1) 55 4088 - 2284Of. Phone: +5255 (1226) 8895Based: Mexico DF, Mexico

Andean RegionCarolina JuanEmail: [email protected]: + 57 (316) 743 - 9347Of. Phone: +57 (1) 639 - 4026Based: Bogota, Colombia

ArgentinaAdrian ScosceiraEmail: [email protected]: +54 (911) 5674 - 6966Of. Phone: +54 (11) 4329 - 1194Based: Buenos Aires, Argentina

Citi Transaction Serviceswww.transactionservices.citi.com

© 2012 Citibank, N.A. All rights reserved. Citi and Arc Design is a trademark and service mark of Citigroup Inc., used and registered throughout the world. All other trademarks are the property of their respective owners.

Documents

ARGENTINA - Citibank Measures: Currency: Fiscal Year: ... Varies from subtropical in the north to sub-arctic in the south ... Citi Transaction Services Latin America & Mexico