Filed Pursuant to Rule 424(b)(3)
Registration No. 333-218279
The information
in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion. Dated May 26,
2017.
Preliminary Prospectus Supplement
to Prospectus dated May 26, 2017
74,000,000
Class B Ordinary Shares, including Class B Ordinary Shares represented by American Depositary Shares
Banco
Macro S.A.
We, Banco
Macro S.A., a
sociedad anónima
organized under the laws of the Republic of Argentina, are offering up to
74,000,000 Class B ordinary shares, par value Ps.1.00 per share, including Class B ordinary shares represented by
American depositary shares (“ADSs”), each representing 10 of our Class B ordinary shares.
We are offering ADSs
and Class B ordinary shares in a global offering, which consists of an international offering of ADSs in the United States and
other countries outside Argentina, a concurrent offering of Class B ordinary shares in Argentina and an offering of Class B ordinary
shares in Argentina pursuant to preferential rights of our existing shareholders, as described below. The international offering
of the ADSs in the United States and other countries outside Argentina is being underwritten by the underwriters named in this
prospectus supplement. In the Argentine offering, Class B ordinary shares are being offered to investors in Argentina through the
Argentine placement agent named in this prospectus supplement. The closings of the international offering and the Argentine offering
are conditioned upon each other. This prospectus supplement is not complete without, and may not be utilized except in connection
with, the accompanying prospectus, including any amendments or supplements thereto.
The ADSs are listed
on the New York Stock Exchange (the “NYSE”) under the symbol “BMA”. On May 25, 2017, the last reported
sale price of the ADSs was US$88.09 per ADS on the NYSE. In addition, our Class B ordinary shares are listed on the
Bolsas y
Mercados Argentinos S.A.
(the “BYMA”) and on
the Mercado Abierto Electrónico S.A.
(the “MAE”)
under the symbol “BMA”. On May 24, 2017, the last reported sale price of our Class B ordinary shares was Ps.139 per
share on the BYMA.
Our existing shareholders
have preferential rights, including preemptive rights and accretion rights, to subscribe to our capital increase resulting from
the global offering. The preferential subscription period will expire on or about ,
2017. The offering pursuant to the preferential rights has not been and will not be registered under the U.S. Securities Act of
1933, as amended (the “Securities Act”), and, accordingly, may not be offered to our shareholders in the United States
or to ADS holders. Certain shareholders have assigned their preferential rights to the Argentine placement agent and, in order
to facilitate the international offering, the Argentine placement agent, at the discretion of the underwriters, will exercise these
rights to purchase Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be sold by us in the international
offering. In addition, the underwriters will be able to acquire from us any Class B ordinary shares, including Class B ordinary
shares represented by ADSs, relating to preferential rights that are not exercised. See “Underwriting” in this prospectus
supplement.
Investing in
the ADSs or our Class B ordinary shares involves significant risks. Before buying any securities, you should carefully read the
discussion of material risks of investing in the ADSs or our Class B ordinary shares set forth under the caption “Item 3.
Key Information—D. Risk Factors” in the 2016 Form 20-F (as defined below), as well as the information set forth under
the caption “Risk Factors” beginning on page S-13 of this prospectus supplement, for more information.
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Per ADS
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Total
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Initial price to public in the international offering
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US$
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US$
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Underwriting discount
(1)
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US$
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US$
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Proceeds, before expenses, to Banco Macro S.A. in the international offering
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US$
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US$
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Note:—
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(1)
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See “Underwriting” in this prospectus supplement.
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The underwriters
may also exercise their option to purchase up to an additional 11,100,000 Class B ordinary shares, including Class B ordinary shares
represented by ADSs, from us, at the public offering price, less the underwriting discount within 30 days after the date of this
prospectus supplement. All of our existing shareholders will have preferential rights with respect to the Class B ordinary shares,
including Class B ordinary shares represented by ADSs, offered pursuant to the underwriters’ option to purchase additional
Class B ordinary shares, including Class B ordinary shares represented by ADSs; provided, however, that such preferential rights
may not be offered to our shareholders in the United States and are not being made available to ADS holders. New shareholders will
not have preferential rights with respect to the Class B ordinary shares, including Class B ordinary shares represented by ADSs,
offered pursuant to the underwriters’ option to purchase additional Class B ordinary shares.
The offering of our
Class B ordinary shares in Argentina will be registered with the Argentine securities regulator (
Comisión Nacional de
Valores
, or the “CNV”). Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state
securities regulators have approved or disapproved these securities, or determined if this prospectus supplement or the accompanying
prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters
expect to deliver the ADSs against payment in New York, New York on ,
2017.
Global Coordinator and Bookrunner
Goldman Sachs & Co. LLC
Joint Bookrunner
BofA Merrill Lynch
Prospectus Supplement dated ,
2017
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
ABOUT THIS
PROSPECTUS SUPPLEMENT
This prospectus supplement
is a supplement to the accompanying prospectus. This prospectus supplement and the accompanying prospectus are parts of a registration
statement that we filed with the SEC using a shelf registration process. Under this shelf registration process, we may sell from
time to time an unspecified amount of any combination of securities described in the accompanying prospectus in one or more offers
such as this offering. The accompanying prospectus provides you with a general description of the securities we may offer. This
prospectus supplement provides you with specific information about the ADSs and the underlying Class B ordinary shares we are offering
in the international offering. Both this prospectus supplement and the accompanying prospectus include important information about
us and other information you should know before investing. Generally, when we refer only to the “prospectus,” we are
referring to both parts combined, and when we refer to the “accompanying prospectus” we are referring to the accompanying
prospectus.
This prospectus supplement
also adds to, updates and changes information contained in the accompanying prospectus. To the extent the information in this prospectus
supplement is different from that in the accompanying prospectus, you should rely on the information in this prospectus supplement.
You should read both this prospectus supplement and the accompanying prospectus, together with the additional information described
under the caption “Incorporation of Certain Information by Reference” in this prospectus supplement and the accompanying
prospectus, before investing in the ADSs.
GENERAL
INFORMATION
Banco Macro S.A.
is a financial institution incorporated on November 21, 1966 as a
sociedad anónima
, a stock corporation, duly incorporated
under the laws of the Republic of Argentina, or Argentina. As used in this prospectus supplement, the terms the “Bank,”
“we,” “us,” “our” and “the registrant” refer to Banco Macro S.A. and its consolidated
subsidiaries. We maintain our financial books and records and publish our financial statements in pesos. In this prospectus supplement,
references to “pesos” or “Ps.” are to Argentine pesos, and references to “U.S. dollars” or
“US$” are to United States dollars.
This prospectus supplement
contains conversions of certain peso amounts into U.S. dollars at specified exchange rates solely for the convenience of the reader.
These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts
or could be converted into U.S. dollars at the exchange rate indicated. Unless otherwise indicated, U.S. dollar amounts that have
been converted from pesos have been converted at an exchange rate of Ps.15.3818 per U.S. dollar, the exchange rate in effect on
March 31, 2017, as published by the Central Bank.
We are responsible
for the information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference
herein and therein. We take no responsibility for, and can provide no assurance as to the reliability of, any other information
that others may give you. We have not authorized any other person to provide you with different information. We are not making
an offer to sell our Class B ordinary shares or ADSs in any jurisdiction where the offer or sale is not permitted. The information
appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein
may only be accurate as of their respective dates. Our business, financial condition, results of operations and prospects may have
changed since such dates. The information in the accompanying prospectus is supplemented by, and to the extent inconsistent therewith
replaced and superseded by, the information in this prospectus supplement.
Our principal executive
offices are located at Sarmiento 447, City of Buenos Aires, Argentina, and our telephone number is + 54-11-5222-6500. We maintain
an internet site at www.macro.com.ar and our website is available in Spanish, with certain portions available in English. Information
contained on our website is not incorporated by reference in, and shall not be considered a part of, this prospectus supplement.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us
to “incorporate by reference” the information we submit to it, which means that we can disclose important information
to you by referring you to those documents that are considered part of this prospectus supplement. Information contained in this
prospectus supplement and information that we submit to the SEC in the future and incorporate by reference will automatically update
and supersede the previously submitted information. We incorporate herein by reference the documents listed below that we have furnished
to the SEC:
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Our report on Form 6-K furnished to the SEC on May 4, 2017, which includes the resolutions adopted by our annual ordinary and
extraordinary shareholders’ meeting held on April 28, 2017; and
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our report on Form 6-K furnished to the SEC on May 26, 2017, which includes our unaudited interim
unconsolidated financial statements and our unaudited interim consolidated financial statements as of March 31, 2017 and for the
three months ended March 31, 2016 and 2017.
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As you read the above
documents or other documents incorporated by reference, you may find inconsistencies in information from one document to another.
If you find inconsistencies, you should rely on the statements made in this prospectus supplement or in the most recent document
incorporated by reference herein.
To obtain copies
of documents incorporated by reference herein or in the accompanying prospectus, see “Where You Can Find More Information”
in the accompanying prospectus. In addition, upon written or oral request, we will provide to any person, at no cost to such person,
including any beneficial owner to whom a copy of this prospectus supplement is delivered, a copy of any or all of the information
that has been incorporated by reference in this prospectus supplement but not delivered with this prospectus supplement. You may
make such a request by writing or telephoning us at the following address or telephone number:
Banco Macro S.A.
Sarmiento 447
City of Buenos Aires
Argentina
Tel: +54-11-5222-6730
FORWARD-LOOKING
STATEMENTS
This prospectus supplement,
the accompanying prospectus and the documents incorporated herein and therein by reference, contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended,
with respect to our possible or assumed future results of operations, business strategies, financing plans, competitive position,
industry environment, potential growth opportunities, the effects of future regulations and the effects of competition. The words
“believe,” “may,” “will,” “aim,” “estimate,” “continue,”
“anticipate,” “intend,” “expect,” “forecast” and similar words are intended to
identify forward-looking statements.
These forward-looking
statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur
in this prospectus supplement, the accompanying prospectus and the documents incorporated herein and therein by reference, are
necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that
could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these
forward-looking statements should be considered in light of various important factors. Important factors that could cause actual
results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:
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changes in general economic, business, political, legal, social or other conditions in Argentina and
worldwide;
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effects of the global financial markets and economic crisis;
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deterioration in regional business and economic conditions;
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fluctuations and declines in the exchange rate of the peso;
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changes in interest rates which may adversely affect financial margins;
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governmental intervention and regulation (including banking and tax regulations);
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adverse legal or regulatory disputes or proceedings;
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credit and other risks of lending, such as increases in defaults by borrowers and other delinquencies;
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increase in the provisions for loan losses;
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fluctuations and declines in the value of Argentine public debt;
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decrease in deposits, customer loss and revenue losses;
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competition in banking, financial services and related industries and the loss of market share;
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cost and availability of funding;
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technological changes, changes in consumer spending and saving habits, and inability to implement
new technologies;
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our ability to consummate acquisitions on favorable terms to us or at all, and the integration of
any acquisitions and the failure to realize expected synergies; and
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the risk factors discussed under the caption “Item 3. Key Information—D. Risk Factors”
in the 2016 Form 20-F.
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Forward-looking statements
speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements
after we distribute this prospectus supplement because of new information, future events or other factors. In light of the risks
and uncertainties described above, the forward-looking events and circumstances discussed in this prospectus supplement might not
occur and are not guarantees of future performance.
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights
selected information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus. This
summary is not complete and does not contain all of the information that you should consider before making a decision to invest
in the ADSs. You should read carefully this entire prospectus supplement and the accompanying prospectus, including each of the
documents incorporated herein and therein by reference, including the financial statements and notes to those financial statements
incorporated by reference herein and therein. You should carefully read the discussion of material risks of investing in the ADSs
set forth under the caption “Item 3. Key Information—D. Risk Factors” in our annual report on Form 20-F for the
fiscal year ended December 31, 2016 filed with the SEC on April 24, 2017 (the “2016 Form 20-F”), which is incorporated
by reference in the accompanying prospectus, and additional information set forth under the caption “Risk Factors”
beginning on page S-13 of this prospectus supplement, for more information.
Banco Macro S.A.
We are one of the
leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products
and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and
by our focus on low- and middle-income individuals and small- and medium-sized businesses, generally located outside of the City
of Buenos Aires. We believe this strategy offers significant opportunity for continued growth in our banking business. According
to the Argentine Central Bank (
Banco Central de la República de Argentina
, or the “Central Bank”), as
of January 1, 2017, we were ranked first in terms of branches and equity, third in terms of total loans and fourth in terms of
total deposits among private banks in Argentina.
As of March 31, 2017,
on a consolidated basis, we had:
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Ps.166,992.3 million (US$10,856.5 million) in total assets;
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Ps.93,757.3 million (US$6,095.3 million) in loans to the non-financial private sector and foreign
residents;
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Ps.115,182.9 million (US$7,488.3 million) in total deposits;
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approximately 3.4 million retail customers and 0.1 million corporate customers; and
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approximately 1.6 million employee payroll accounts for private sector customers and provincial
governments and 0.8 million retiree accounts.
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Our consolidated
net income for the year ended December 31, 2016 was Ps.6,540.8 million (US$425.2 million), representing a return on average equity
of 34.1% and a return on average assets of 5.2%. Our consolidated net income for the three months ended March 31, 2017 was Ps.1,764.0
million (US$114.7 million), representing an annualized return on average equity of 30.5% and an annualized return on average assets
of 4.6%.
In general, given
the relatively low level of banking intermediation in Argentina, there are limited products and services being offered. We are
focusing on the overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending
products. We have a holistic approach to our banking business; we do not manage the Bank by segments or divisions or by customer
categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources and assessing
profitability. We offer savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related
products and transactional services available to our individual customers and small- and medium-sized businesses through our branch
network. We also offer
Plan Sueldo
payroll services, lending, corporate credit cards, mortgage finance, transaction processing
and foreign exchange services. In addition, our
Plan Sueldo
payroll processing services for private companies and the public
sector give us a large and stable customer deposit base.
Our Competitive Strengths
We believe we are
well positioned to benefit from opportunities created by the economic and business environment in Argentina. Our competitive strengths
include the following:
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Strong financial position
. As of March 31, 2017, we had excess capital of Ps.18,817.1 million
(22.7% capitalization ratio). Excess capital is a Central Bank metric, indicating the positive difference between our regulatory
capital (
Responsabilidad Patrimonial Computable
) as of a given date, and the minimum Central Bank-determined regulatory
capital required as of such date. Our excess capital is aimed at supporting growth, and consequently, a higher leverage of our
balance sheet.
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Consistent profitability: As of March 31, 2017, we had obtained profitability for the last 61 consecutive
quarters, the only bank with such a track record in Argentina, with a return on average equity of 33.4%, 37.2% and 34.1% for the
years ended December 31, 2014, 2015 and 2016 compared to 32.7%, 32.4% and 29.7%, respectively, for the Argentine banking system
as a whole. As of March 31, 2017, our annualized return on average equity was 30.5%.
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Strong shareholders’ equity: Our shareholders’ equity as of December 31, 2014, 2015
and 2016 and March 31, 2017 as calculated under the accounting rules of the Central Bank as in effect from time to time (“Central
Bank Rules”), was Ps.11,491.8 million, Ps.15,877.6 million, Ps.22,105.9 million (US$1,437.2 million) and Ps.23,869.9 million
(US$1,551.8 million), respectively, and our shareholders’ equity under generally accepted accounting principles in the United
States (“U.S. GAAP”) at December 31, 2014, 2015 and 2016 was Ps.11,418.5 million, Ps.15,873.2 million and Ps.22,303.9
million (US$1,450.0 million), respectively.
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Strong presence in fast-growing target customer market
. We have achieved a leading position
with low- and middle-income individuals and among small- and medium-sized businesses (“Pymes”), generally located outside
the City of Buenos Aires, which have been relatively underserved by the banking system. Based on our experience, this target market
offers significant growth opportunities and a stable base of depositors.
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High exposure to export-led growth
. Given the geographical location of the customers we
target, we have acquired banks with a large number of branches outside of the City of Buenos Aires with the aim of completing our
national coverage. The Bank’s focus is particularly on some export oriented provinces. Most of these provinces engage in
economic activities primarily concentrated in areas such as agriculture, mining, cargo transportation, edible oils, farming and
tourism, which have benefited from the export-driven growth in the Argentine economy.
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Largest private-sector branch network in Argentina
. With 445 branches and 1,415 ATMs as
of March 31, 2017, we have the most extensive branch network among private-sector banks in Argentina. We consider our branch network
to be our key distribution channel for marketing our products and services to our entire customer base with a personalized approach.
In line with our strategy, approximately 93% of these branches are located outside of the City of Buenos Aires.
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Loyal customer base
. We believe that our customers are loyal to us due to our presence in
traditionally underserved markets and our
Plan Sueldo
payroll services. We have benefited from Argentine regulations that
require all employees to maintain
Plan Sueldo
accounts for the direct deposit of their wages. In addition, we emphasize
face-to-face relationships with our customers and offer them personalized advice.
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Exclusive financial agent for four Argentine provinces
. We perform financial agency services
for the governments of the provinces of Salta, Jujuy, Misiones and Tucumán in northern Argentina. As a result, each provincial
government’s bank accounts are held in our bank and we provide their employees with
Plan Sueldo
accounts, giving us
access to substantial low cost funding and a large number of loyal customers.
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Strong and experienced management team and committed shareholders
. We are led by committed
shareholders who have transformed the Bank from a small wholesale bank into one of the strongest and largest banks in Argentina
and by a senior management team with extensive experience in the banking industry.
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Our Strategy
Our competitive strengths
position us to better participate in the future development of the Argentine financial system.
We operate in accordance
with our sustainability policy based on five business-related strategic pillars that impact all our clients, establishing a short-,
medium- and long-term sustainability strategy. Our strategic sustainability pillars are:
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Financial inclusion and education: encouraging the use of banking products and accessibility, focused
on lower income sectors and the financial education of all communities.
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Direct and indirect environmental impact: encouraging the protection of the environment and society,
both internally and in our value chain.
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Responsibility for the wellbeing and inclusion of people: aiming to improve the quality of life
of individuals, we support the professional development of our staff and encourage diversity and inclusion.
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Development of small- and medium-sized businesses accompanying our clients in the development of
their projects, offering customized products services and providing knowledge, advice and the best customer service.
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Transparency in all our actions: in order to create a framework of trust and credibility for all
our interest groups, in compliance with the main national and international transparency and management responsibility standards
and best practices.
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Our goal is to promote
the overall growth of the Bank by increasing our customer base, expanding our loan portfolio and generating more fee income from
transactional services. We achieve this goal by managing the Bank on a holistic basis, focusing our growth strategy on the marketing
and promotion of our standard banking products and services. We have pursued our growth strategy by acquiring banks throughout
Argentina, which has enabled us to significantly expand our branch network and customer base. We have taken advantage of the opportunities
presented by the Argentine financial system to move into new locations by acquiring banks or absorbing branches from banks liquidated
by the Central Bank.
We intend to continue
enhancing our position as a leading Argentine bank. The key elements of our strategy include:
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Focus on underserved markets with strong growth potential
. We intend to continue focusing
on both low- and middle-income individuals and small- and medium-sized businesses, most of which have traditionally been underserved
by the Argentine banking system and are generally located outside the City of Buenos Aires, where competition is relatively weaker
and where we have achieved a leading presence. We believe that these markets offer attractive opportunities given the low penetration
of banking services and limited competition.
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Further develop branch network
. We seek to further expand our branch network management
model and the development of the network by opening new branches, reinforcing the local business opportunities and targeting the
support and sale points in accordance with the specific needs of our clients.
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Further expand our customer base
. We intend to continue growing our customer base, which
is essential to increasing interest and fee-based revenues. To attract new customers, we intend to:
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Offer medium- and long-term credit. We intend to capitalize on the increased demand for long-term
credit that we believe will accompany the expected economic growth in Argentina. We intend to use our strong liquidity and our
capital base to offer a more readily available range of medium- and long-term credit products than our competitors.
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Focus on corporate banking customers. Increase corporate financing by means of a wide offer of
credit and transaction products that suit each client’s profile and needs.
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Expand
Plan Sueldo
payroll services. We will continue to actively market our
Plan Sueldo
payroll services, emphasizing the benefits of our extensive network for companies with nationwide or regional needs.
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Strengthen our market share in credit cards by increasing promotional activity and benefits for
clients.
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Further expand the use of automatic channels both in customer acquisition and retail products,
increasing operational efficiency.
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Further expand the development of the customer service support, granting them different means to
carry out financial transactions without time limits, in a total secure, simple and comfortable manner.
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Grow our high-end customer base through our
Selecta
product suite.
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Focus on new sustainability objectives
. We intend to focus on new sustainability objectives
in line with our business, in our fundamental areas and further expand such initiatives.
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Look for growth opportunities
. As a key component of our growth strategy, we continually
look for opportunities to grow our bank, including through acquisitions. At any given time, we may have one or more potential acquisitions
or similar transactions in the Argentine banking and financial sector under active consideration at varying stages of evaluation,
negotiation and/or due diligence review, any of which may be material, either individually or in the aggregate. We are currently
participating in competitive processes to acquire one or more financial institutions which, individually or in the aggregate, could
represent, if acquired, over 20% of our total assets. We can provide no assurances that we will proceed with any specific transaction
or, if we proceed, that we will be selected in a competitive process or, if selected, that our due diligence review and negotiation
of definitive agreements will be completed to our satisfaction or that any such transaction could be successfully consummated.
As described under “Use of Proceeds,” if we were to proceed and acquire any such financial institution, we may fund
the purchase price for any such transaction with all or a portion of the proceeds to us from the global offering, together with
cash on hand and funds from other financing arrangements, which proceeds will otherwise be used for general corporate purposes
or for future acquisitions. See also the information set forth under the caption “Item 3.Key Information—D. Risk Factors—Risks
relating to us—We will continue to consider acquisition opportunities, which may not be successful” in the 2016 Form
20-F.
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Recent Developments
At our annual ordinary
and extraordinary shareholders’ meeting held on April 28, 2017, the shareholders approved, among other matters:
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an aggregate dividend payment of Ps.701,475,633.60 for the fiscal year ended December 31, 2016
(see “—April 2017 Dividend” below);
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a capital increase through the issuance of up to 74,000,000 of our Class B ordinary shares;
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an increase of the maximum amount of our Global Medium-Term Note Program from US$1,000,000,000
to US$1,500,000,000; and
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the appointment of Messrs. Marcos Brito, Delfín Federico Ezequiel Carballo, Alejandro Eduardo
Fargosi and Juan Martín Monge Varela as members of our Board of Directors.
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On May 8,
2017, we issued Ps.4,620,570,000 aggregate principal amount of 17.500% notes due 2022.
April 2017 Dividend
The aggregate dividend
payment of Ps.701,475,633.60, approved by our shareholders’ meeting on April 28, 2017, is, as of the date of this prospectus
supplement, pending approval by the Central Bank, and will be payable to all shareholders who hold our Class B ordinary shares
on the business day prior to such payment, subject to Argentine law requirements, the Deposit Agreement (as defined herein) and
applicable foreign exchange regulations.
In the event the Class
B ordinary shares and ADSs are issued prior to, or on, the business day prior to the payment of the dividend, investors who acquire
Class B ordinary shares or ADSs in the global offering will be entitled to receive their corresponding dividend payment in respect
of such acquired Class B ordinary shares or ADSs. In the event that the Class B ordinary shares and ADSs offered hereunder are
issued after the business day prior to the payment of the dividend, investors who acquire the Class B ordinary shares and ADSs
in the global offering will not be entitled to receive their corresponding dividend payment in respect of such acquired Class B
ordinary shares or ADSs. The dividend will be paid in pesos and, in the case of ADS, will be converted into U.S. dollars, and paid
to holders of ADSs after deduction of commissions, currency conversion charges, taxes and/or government charges in accordance with
the Deposit Agreement.
SUMMARY
FINANCIAL AND OPERATING DATA
The following tables
present summary historical financial data for us for each of the periods indicated. You should read this information in conjunction
with our unaudited interim consolidated financial statements as of March 31, 2017 and for the three months ended March 31, 2016
and 2017, incorporated by reference in this prospectus supplement, our annual audited consolidated financial statements as of December
31, 2015 and 2016 and for the years ended December 31, 2014, 2015 and 2016 included in the 2016 Form 20-F and the information set
forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in this prospectus supplement.
Our consolidated
financial statements are prepared in conformity with Central Bank Rules, which differ in certain respects from U.S. GAAP. Our annual
audited consolidated financial statements as of December 31, 2015 and 2016 and for the years ended December 31, 2014, 2015 and
2016 included in the 2016 Form 20-F have been reconciled to U.S. GAAP. See note 35 to our annual audited consolidated financial
statements as of December 31, 2015 and 2016 and for the years ended December 31, 2014, 2015 and 2016 included in the 2016 Form
20-F for a reconciliation of our consolidated financial statements to U.S. GAAP.
We have derived our
summary consolidated financial data as of December 31, 2015 and 2016 and for the years ended December 31, 2014, 2015 and 2016 from
our annual audited consolidated financial statements included in the 2016 Form 20-F. We have derived our summary consolidated financial
data as of March 31, 2017 and for the three months ended March 31, 2016 and 2017 from our unaudited interim consolidated financial
statements, incorporated by reference herein, prepared in accordance with Central Bank rules. Our results as of and for the three
months ended March 31, 2017 are not necessarily indicative of the results to be expected for the entire year 2017 or any other
period. We have derived our summary balance sheet data as of December 31, 2014 from our annual audited consolidated financial statements
as of such date and for the year ended December 31, 2014 not included in this prospectus supplement or the 2016 Form 20-F.
This prospectus supplement
contains conversions of certain peso amounts into U.S. dollars at specified exchange rates solely for the convenience of the reader.
These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts
or could be converted into U.S. dollars at the exchange rate indicated. Unless otherwise indicated, U.S. dollar amounts that have
been converted from pesos have been converted at an exchange rate of Ps.15.3818 per U.S. dollar, the exchange rate in effect on
March 31, 2017, as published by the Central Bank.
Based on Communication
“A” 5940 of the Central Bank, issued on April 1, 2016, we derecognized certain provisions related to monetary sanctions
amounting to Ps.1.468 million with retroactive effect on our 2015 and 2016 financial statements. The 2015 and 2016 financial data
included in this prospectus supplement has been revised to include the effects of this adjustment.
Under Central Bank
Rules, our consolidated financial statements were adjusted to account for the effects of wholesale-price inflation in Argentina
for the periods through February 28, 2003. See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Factors Affecting Results of Operations—Inflation in Argentina” in this prospectus supplement.
For the periods subsequent to February 28, 2003, the inflation adjustments were no longer applied to our consolidated financial
statements under Central Bank Rules. In reviewing our financial statements, investors should consider that, in recent years, there
have been significant changes in the prevailing prices of certain inputs and economic indicators, such as salary cost, interest
and exchange rates, however, local regulations have not required the application of inflation adjustments to our consolidated financial
statements.
As a result of Central
Bank requirements, we expect to prepare our financial statements in accordance with International Financial Reporting Standards
(“IFRS”), with certain criteria of measurement and exposure specifically established by the Central Bank, as from January
1, 2018. See note 6 to our unaudited interim consolidated financial statements as of March 31, 2017 and for the three months
ended March 31, 2016 and 2017, incorporated by reference herein. Following our adoption of IFRS, our results of operation may differ
significantly from previous amounts reported under Central Bank Rules. In particular, we expect that our adoption of IFRS, as supplemented
by applicable Argentine regulations, will affect our accounting of certain items in our consolidated financial statements.
Consolidated Income Statement Data
|
|
Year
Ended December 31,
|
|
|
Three
Months Ended March 31,
|
|
|
|
2014
|
|
|
2015
(1)
|
|
|
2016
|
|
|
2016
(1)
|
|
|
2017
|
|
|
|
(in thousands of pesos,
except for number of shares, net income per share and dividends per share)
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central
Bank Rules:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
income
|
|
|
14,682,649
|
|
|
|
20,109,123
|
|
|
|
28,935,288
|
|
|
|
6,419,245
|
|
|
|
7,600,382
|
|
Financial
expense
|
|
|
(6,582,561
|
)
|
|
|
(8,842,655
|
)
|
|
|
(13,300,762
|
)
|
|
|
(3,153,905
|
)
|
|
|
(2,960,035
|
)
|
Gross intermediation margin
|
|
|
8,100,088
|
|
|
|
11,266,468
|
|
|
|
15,634,526
|
|
|
|
3,265,340
|
|
|
|
4,640,347
|
|
Provision for loan losses
|
|
|
(664,882
|
)
|
|
|
(877,134
|
)
|
|
|
(1,073,085
|
)
|
|
|
(178,233
|
)
|
|
|
(361,244
|
)
|
Service charge income
|
|
|
4,655,788
|
|
|
|
6,115,362
|
|
|
|
7,968,732
|
|
|
|
1,737,881
|
|
|
|
2,401,304
|
|
Service charge expense
|
|
|
(1,215,759
|
)
|
|
|
(1,714,833
|
)
|
|
|
(2,603,839
|
)
|
|
|
(575,815
|
)
|
|
|
(734,324
|
)
|
Administrative expenses
|
|
|
(5,498,879
|
)
|
|
|
(7,225,908
|
)
|
|
|
(9,970,656
|
)
|
|
|
(2,120,934
|
)
|
|
|
(2,963,533
|
)
|
Other income
|
|
|
351,203
|
|
|
|
409,172
|
|
|
|
598,449
|
|
|
|
139,230
|
|
|
|
144,490
|
|
Other expense
|
|
|
(262,350
|
)
|
|
|
(442,216
|
)
|
|
|
(481,326
|
)
|
|
|
(86,810
|
)
|
|
|
(145,283
|
)
|
Minority interest in subsidiaries
|
|
|
(23,492
|
)
|
|
|
(35,359
|
)
|
|
|
(54,592
|
)
|
|
|
(10,646
|
)
|
|
|
(15,844
|
)
|
Income
tax
|
|
|
(1,962,186
|
)
|
|
|
(2,485,663
|
)
|
|
|
(3,477,377
|
)
|
|
|
(762,384
|
)
|
|
|
(1,201,868
|
)
|
Net
income
|
|
|
3,479,531
|
|
|
|
5,009,889
|
|
|
|
6,540,832
|
|
|
|
1,407,629
|
|
|
|
1,764,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
(2)
|
|
|
5.95
|
|
|
|
8.57
|
|
|
|
11.19
|
|
|
|
2.41
|
|
|
|
3.02
|
|
Dividends per share in
Ps. approved by the shareholders’ meeting
|
|
|
1.02
|
|
|
|
1.10
|
|
|
|
1.20
|
(3)
|
|
|
—
|
|
|
|
—
|
|
Dividends per share in
US$ approved by the shareholders’ meeting
|
|
|
0.12
|
|
|
|
0.08
|
|
|
|
0.08
|
(3)
|
|
|
—
|
|
|
|
—
|
|
Number of outstanding
shares (in thousands)
|
|
|
584,563
|
|
|
|
584,563
|
|
|
|
584,563
|
|
|
|
584,563
|
|
|
|
584,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP:
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
3,572,933
|
|
|
|
4,947,144
|
|
|
|
6,637,008
|
|
|
|
—
|
|
|
|
—
|
|
Less: Net income attributable
to the non-controlling interest
|
|
|
(25,424
|
)
|
|
|
(37,299
|
)
|
|
|
(58,097
|
)
|
|
|
—
|
|
|
|
—
|
|
Net income attributable
to the controlling interest
|
|
|
3,547,509
|
|
|
|
4,909,845
|
|
|
|
6,578,911
|
|
|
|
—
|
|
|
|
—
|
|
Net income per share
|
|
|
6.11
|
|
|
|
8.46
|
|
|
|
11.35
|
|
|
|
—
|
|
|
|
—
|
|
Total net income per share
attributable to the controlling interest
(5)
|
|
|
6.07
|
|
|
|
8.40
|
|
|
|
11.25
|
|
|
|
—
|
|
|
|
—
|
|
Weighted average number
of outstanding shares (in thousands)
|
|
|
584,537
|
|
|
|
584,563
|
|
|
|
584,563
|
|
|
|
—
|
|
|
|
—
|
|
Notes:—
|
(1)
|
Based on Communication “A” 5940 of the Central Bank, issued on April 1, 2016, we reversed
certain provisions related to monetary sanctions amounting to Ps.1.468 million with retroactive effect on our financial statements
as of and for the year ended December 31, 2015 and as of March 31, 2016.
|
|
(2)
|
Net income in accordance with Central Bank Rules divided by weighted average number of outstanding
shares.
|
|
(3)
|
On March 8, 2017, the Board of Directors resolved to propose to the shareholders’ meeting
an aggregate dividend of Ps.701,475,633.60 for the fiscal year ended December 31, 2016. Such dividend was approved by the shareholders’
meeting on April 28, 2017 and, as of the date of this prospectus supplement, is pending approval from the Central Bank. See also
“Prospectus Supplement Summary—April 2017 Dividend” and “Capitalization” in this prospectus supplement.
|
|
(4)
|
See note 35 to our annual audited consolidated financial statements as of December 31, 2015 and
2016 and for the years ended December 31, 2014, 2015 and 2016 included in the 2016 Form 20-F for a summary of significant differences
between Central Bank Rules and U.S. GAAP.
|
|
(5)
|
Net income in accordance with U.S. GAAP divided by weighted average number of outstanding shares.
|
Consolidated Balance Sheet Data
|
|
As of December 31,
|
|
|
As of March 31,
|
|
|
|
2014
|
|
|
2015
(1)
|
|
|
2016
|
|
|
2017
|
|
|
|
(in thousands of pesos)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Bank Rules:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks and correspondents
|
|
|
15,434,202
|
|
|
|
19,402,821
|
|
|
|
36,089,156
|
|
|
|
29,014,735
|
|
Government and private securities
|
|
|
10,312,498
|
|
|
|
15,391,372
|
|
|
|
19,846,269
|
|
|
|
23,777,564
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to the non-financial government sector
|
|
|
604,417
|
|
|
|
748,067
|
|
|
|
1,532,532
|
|
|
|
479,968
|
|
to the financial sector
|
|
|
213,867
|
|
|
|
227,390
|
|
|
|
1,730,620
|
|
|
|
1,890,138
|
|
to the non-financial private sector and foreign residents
|
|
|
44,108,055
|
|
|
|
62,852,922
|
|
|
|
86,540,360
|
|
|
|
93,757,294
|
|
Allowances for loan losses
|
|
|
(1,186,044
|
)
|
|
|
(1,495,964
|
)
|
|
|
(1,830,505
|
)
|
|
|
(2,044,072
|
)
|
Other assets
|
|
|
5,508,639
|
|
|
|
7,825,351
|
|
|
|
11,090,528
|
|
|
|
20,116,699
|
|
Total assets
|
|
|
74,995,634
|
|
|
|
104,951,959
|
|
|
|
154,998,960
|
|
|
|
166,992,326
|
|
Average assets
(2)
|
|
|
67,852,744
|
|
|
|
86,493,207
|
|
|
|
126,081,164
|
|
|
|
155,941,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from the non-financial government sector
|
|
|
8,570,055
|
|
|
|
9,588,378
|
|
|
|
9,552,190
|
|
|
|
13,007,583
|
|
from the financial sector
|
|
|
38,683
|
|
|
|
40,145
|
|
|
|
55,867
|
|
|
|
50,869
|
|
from the non-financial private sector and foreign residents
|
|
|
46,107,816
|
|
|
|
66,893,075
|
|
|
|
102,331,683
|
|
|
|
102,124,399
|
|
Other liabilities from financial intermediation and other liabilities
|
|
|
7,228,056
|
|
|
|
10,187,824
|
|
|
|
14,011,410
|
|
|
|
21,050,116
|
|
Provisions
|
|
|
171,923
|
|
|
|
258,025
|
|
|
|
335,007
|
|
|
|
351,667
|
|
Subordinated corporate bonds
|
|
|
1,287,317
|
|
|
|
1,957,618
|
|
|
|
6,407,840
|
|
|
|
6,322,304
|
|
Items pending allocation
|
|
|
6,966
|
|
|
|
21,039
|
|
|
|
16,266
|
|
|
|
16,776
|
|
Minority interest in subsidiaries
|
|
|
93,001
|
|
|
|
128,305
|
|
|
|
182,799
|
|
|
|
198,669
|
|
Total liabilities
|
|
|
63,503,817
|
|
|
|
89,074,409
|
|
|
|
132,893,062
|
|
|
|
143,122,383
|
|
Shareholders’ equity
|
|
|
11,491,817
|
|
|
|
15,877,550
|
|
|
|
22,105,898
|
|
|
|
23,869,943
|
|
Average shareholders’ equity
(2)
|
|
|
10,425,703
|
|
|
|
13,477,595
|
|
|
|
19,188,120
|
|
|
|
23,443,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity attributable to the controlling interest
|
|
|
11,323,047
|
|
|
|
15,740,455
|
|
|
|
22,113,057
|
|
|
|
—
|
|
Non-controlling interests
|
|
|
95,479
|
|
|
|
132,778
|
|
|
|
190,875
|
|
|
|
—
|
|
Shareholders’ equity
|
|
|
11,418,526
|
|
|
|
15,873,233
|
|
|
|
22,303,932
|
|
|
|
—
|
|
Notes:—
|
(1)
|
Based on Communication “A” 5940 of the Central Bank, issued on April 1, 2016, we reversed
certain provisions related to monetary sanctions amounting to Ps.1.468 million with retroactive effect on our financial statements
as of and for the year ended December 31, 2015.
|
|
(2)
|
Daily average for the period.
|
|
(3)
|
See note 35 to our annual audited consolidated financial statements as of December 31, 2015 and
2016 and for the years ended December 31, 2014, 2015 and 2016 included in the 2016 Form 20-F for a summary of significant differences
between Central Bank Rules and U.S. GAAP.
|
Ratios in Accordance with Central Bank
Rules
|
|
As of and for the Year Ended
December 31,
|
|
|
As of and for the Three
Months Ended
March 31,
|
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2016
|
|
|
2017
|
|
|
|
(in thousands of pesos)
|
|
Consolidated ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability and Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (%)
(1)
|
|
|
15.74
|
|
|
|
17.90
|
|
|
|
18.22
|
|
|
|
16.74
|
|
|
|
18.25
|
|
Fee income ratio (%)
(2)
|
|
|
36.50
|
|
|
|
35.18
|
|
|
|
33.76
|
|
|
|
34.74
|
|
|
|
34.10
|
|
Efficiency ratio (%)
(3)
|
|
|
43.11
|
|
|
|
41.57
|
|
|
|
42.24
|
|
|
|
42.39
|
|
|
|
42.09
|
|
Ratio of earnings to fixed charges (excluding interest on deposits)
(4)
|
|
|
25.04
|
x
|
|
|
31.40
|
x
|
|
|
23.65
|
x
|
|
|
23.90
|
x
|
|
|
20.53
|
x
|
Ratio of earnings to fixed charges (including interest on deposits)
(5)
|
|
|
2.01
|
x
|
|
|
2.07
|
x
|
|
|
1.93
|
x
|
|
|
1.84
|
x
|
|
|
2.30
|
x
|
Fee income as a percentage of administrative expense (%)
|
|
|
84.67
|
|
|
|
84.63
|
|
|
|
79.92
|
|
|
|
81.94
|
|
|
|
81.03
|
|
Return on average equity
(6)
(%)
|
|
|
33.37
|
|
|
|
37.17
|
|
|
|
34.09
|
|
|
|
33.36
|
|
|
|
30.52
|
|
Return on average assets
(6)
(%)
|
|
|
5.13
|
|
|
|
5.79
|
|
|
|
5.19
|
|
|
|
5.13
|
|
|
|
4.59
|
|
Liquidity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans as a percentage of total deposits (%)
|
|
|
82.11
|
|
|
|
83.41
|
|
|
|
80.22
|
|
|
|
76.01
|
|
|
|
83.46
|
|
Liquid assets as a percentage of total deposits(%)
(7)
|
|
|
40.57
|
|
|
|
38.43
|
|
|
|
47.64
|
|
|
|
44.37
|
|
|
|
44.69
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity as a percentage of total assets (%)
|
|
|
15.32
|
|
|
|
15.13
|
|
|
|
14.26
|
|
|
|
15.26
|
|
|
|
14.29
|
|
Regulatory capital as a percentage of credit risk-weighted assets(%)
(8)
|
|
|
24.02
|
|
|
|
20.79
|
|
|
|
30.00
|
|
|
|
23.48
|
|
|
|
22.75
|
|
Asset Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans as a percentage of total loans (%)
(9)
|
|
|
1.95
|
|
|
|
1.55
|
|
|
|
1.15
|
|
|
|
1.58
|
|
|
|
1.36
|
|
Allowances for loan losses as a percentage of total loans (%)
|
|
|
2.64
|
|
|
|
2.34
|
|
|
|
2.04
|
|
|
|
2.40
|
|
|
|
2.13
|
|
Allowances for loan losses as a percentage of non-performing loans (%)
(9)
|
|
|
135.29
|
|
|
|
151.48
|
|
|
|
176.77
|
|
|
|
151.79
|
|
|
|
156.22
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of branches
|
|
|
434
|
|
|
|
439
|
|
|
|
444
|
|
|
|
439
|
|
|
|
445
|
|
Number of employees
(10)
|
|
|
8,693
|
|
|
|
8,727
|
|
|
|
8,617
|
|
|
|
8,749
|
|
|
|
8,675
|
|
Notes:—
|
(1)
|
Net interest income divided by average interest earning assets, such average based on a daily average.
|
|
(2)
|
Service charge income divided by the sum of gross intermediation margin and service charge income.
|
|
(3)
|
Administrative expenses divided by the sum of gross intermediation margin and service charge income.
|
|
(4)
|
For the purpose of computing the ratio of earnings to fixed charges excluding interest on deposits,
earnings consist of income before income taxes plus fixed charges; and fixed charges excluding interest on deposits consist of
gross interest expense minus interest on deposits.
|
|
(5)
|
For the purpose of computing the ratio of earnings to fixed charges including interest on deposits,
earnings consist of income before income taxes plus fixed charges; and fixed charges including interest on deposits is equal to
gross interest expense.
|
|
(6)
|
The average of the daily amounts on each business day during the relevant period.
|
|
(7)
|
Liquid assets include cash, cash collateral, reverse repos, Letras del Banco Central (Central Bank
bonds, “LEBACS”) and Notas del Banco Central (Central Bank notes, “NOBACS”) and interfinancing loans.
|
|
(8)
|
See “Capitalization” in this prospectus supplement for further information on our capitalization
ratio and regulatory ratio and also “Item B. Business Overview—Banking Regulation and Supervision—Regulatory
Capital of Financial Institution: Tier 1 and Tier 2 capital regulations” in the 2016 Form 20-F.
|
|
(9)
|
Non-performing loans include all loans to borrowers classified as “3-troubled/medium risk,”
“4-with high risk of insolvency/high risk,” “5-irrecoverable” and “6-irrecoverable according to Central
Bank Rules” under the Central Bank loan classification system. See “Item B. Business Overview—Banking Regulation
and Supervision—Debt Classification and Loan Loss Provisions” in the 2016 Form 20-F.
|
|
(10)
|
If workers performing their duties pursuant to the “
Acciones de entrenamiento para el
trabajo
” program of the Ministry of Labor, Employment and Social Security and other casual workers were included, the
number of employees of the Bank would have been 8,728, 8,765 and 8,666 for 2014, 2015 and 2016, respectively. As of March 31, 2017,
the number would have been 8,723. We do not account for such workers as employees, as we do not remunerate them for their services,
which are paid directly by the Argentine province where they work.
|
THE OFFERING
Issuer
|
Banco Macro S.A.
|
|
|
Global Offering
|
The global offering of up to 74,000,000 Class B ordinary shares consists of the international offering,
the concurrent Argentine offering and the preferential offering to our existing shareholders in Argentina. The closings of the international
offering and the Argentine offering are conditioned upon each other.
|
|
|
International Offering
|
In the international offering, we are offering pursuant to this prospectus supplement
ADSs through the underwriters named in this prospectus supplement.
|
|
|
Argentine Offering
|
In the Argentine offering, we are offering
Class B ordinary shares through the Argentine placement agent named in this prospectus supplement to investors in Argentina.
|
|
|
ADSs
|
Each ADS represents 10 Class B ordinary shares held by Banco Santander Río S.A., as custodian. ADSs are evidenced by American depositary receipts (“ADRs”). The ADSs will be issued under the Deposit Agreement, dated as of March 23, 2006, among us, The Bank of New York Mellon, as depositary (the “Depositary”), and the holders from time to time of ADRs issued thereunder (the “Deposit Agreement”).
|
|
|
Preferential Rights
|
Our existing shareholders have preemptive
rights to subscribe for any capital increase by us, including in connection with the international offering and the Argentine offering,
in a number sufficient to maintain their proportionate holdings in our total capital. In addition, our existing shareholders have
accretion rights, which will permit them to subscribe for Class B ordinary shares that are not subscribed by other existing shareholders
in the preemptive rights offering in proportion to the percentage of shares for which such subscribing existing shareholders have
exercised their preemptive rights.
The preferential rights have not been and
will not be registered under the Securities Act and, accordingly may not be offered to our shareholders in the United States or
to holders of the ADSs. In order to facilitate the global offering, certain shareholders
have assigned their preferential
rights to subscribe for Class B ordinary shares with respect to the capital increase to the Argentine placement agent and, in order
to facilitate the international offering, the Argentine placement agent, at the discretion of the underwriters, will exercise these
rights to purchase Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be sold by us in the international
offering. Subject to closing conditions set forth in the underwriting agreement, the underwriters will exercise such rights in
order to acquire the Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be offered in the international
offering and deposit such shares for delivery of ADSs. In addition, the underwriters will be able to acquire from us any Class
B ordinary shares, including Class B ordinary shares represented by ADSs, relating to preferential rights that are not exercised
and deposit such shares for delivery of ADSs. See “Underwriting” in this prospectus supplement.
The preferential subscription period will
expire on or about , 2017.
New shareholders will not have such preferential rights in respect of the capital increase represented
by the international offering and the Argentine offering (including in respect of Class B ordinary shares underlying the ADSs that
may be issued in connection with the underwriters’ option to purchase additional shares) but will have such rights in respect
of any subsequent capital increase.
|
Option to Purchase
|
The underwriters may also exercise their option to purchase up to an additional 11,100,000 Class B ordinary
shares, including Class B ordinary shares represented by ADSs, from us, at the public offering price, less the underwriting discount,
within 30 days after the date of this prospectus supplement. All of our existing shareholders will have preferential rights with
respect to the Class B ordinary shares, including Class B ordinary shares represented by ADSs, offered pursuant to the underwriters’
option to purchase additional Class B ordinary shares, including Class B ordinary shares represented by ADSs; provided, however,
that the preferential rights may not be offered to our shareholders in the United States or ADS holders. New shareholders will
not have preferential rights with respect to the Class B ordinary shares, including Class B ordinary shares represented by ADSs,
offered pursuant to the underwriters’ option to purchase additional Class B ordinary shares, including Class B ordinary shares
represented by ADSs.
|
|
|
Lock-up
|
We have agreed, subject to certain exceptions, not to sell, offer or
otherwise dispose of or transfer, directly or indirectly, any of our capital stock (including Class B ordinary shares)
or any securities convertible into or exchangeable for our capital stock, during a period commencing on the date of
this prospectus supplement and ending 90 days after execution of the underwriting agreement for the offering without
the prior approval of Goldman Sachs & Co. LLC. Our Chairman and Vice Chairman, who collectively held, as of
March 31, 2017, approximately 37.3% of our Class B ordinary shares,
have agreed to similar lock-up provisions, subject to certain exceptions. For more information, see
“Underwriting” in this prospectus supplement.
|
|
|
Listing
|
The ADSs are listed on the NYSE under the symbol “BMA”. Our Class B ordinary shares are listed on the BYMA and the
MAE, under the symbol “BMA”.
|
|
|
Class B Ordinary Shares Outstanding Immediately Prior to and Following the Offering
|
Immediately prior to the offering, our issued and outstanding capital stock consisted of 11,235,670
Class A shares and 573,327,358 Class B ordinary shares, including Class B ordinary shares represented by ADSs. See note 10 to our
annual audited
consolidated financial
statements as of December 31, 2015 and 2016 and for the years
ended December 31, 2014, 2015 and 2016 included in the 2016 Form
20-F. We will have 658,427,358 Class B ordinary shares outstanding, including Class B ordinary shares
represented by ADSs, after giving effect to the offering, assuming that we sell the total number of Class B ordinary shares
set forth on the cover of this prospectus supplement and that the option to purchase up to 11,100,000 Class B ordinary
shares, including Class B ordinary shares represented by ADSs, is not exercised. See “Capitalization” in this
prospectus supplement.
|
|
|
Voting Rights
|
Under our bylaws, each Class A share entitles the holder thereof to five votes at any meeting of our shareholders, except in certain circumstances, and Class B ordinary shares entitle the holders thereof to one vote per share. Subject to Argentine Corporate Law, our by-laws and the terms of the Deposit Agreement, holders of ADSs will be entitled to instruct the Depositary to vote or cause to be voted the number of shares represented by such ADSs. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights” in the 2016 Form 20-F.
|
|
|
Use of Proceeds
|
We intend to use the net proceeds from the global offering for general corporate purposes. Specifically, we seek to be in a position to fund the expansion of credit demand in Argentina and to take advantage of potential acquisition opportunities in the Argentine banking and financial system.
|
|
|
Taxation
|
For a discussion of the material U.S. and Argentine tax considerations relating to an investment in our Class B ordinary shares or the ADSs, see “Taxation” in this prospectus supplement.
|
Charges of the Depositary
|
We will pay all transfer and other taxes and governmental charges arising solely from the existence of the Deposit Agreement. We will also pay all charges of the Depositary in connection with the initial deposit of Class B ordinary shares offered in the international offering. However, holders of ADSs will be required to pay any other transfer and other taxes and governmental charges and any other charges expressly provided in the Deposit Agreement to be for their accounts. See “Item 12. Description of Securities Other than Equity Securities—D American Depositary Shares—Fees and Charges Applicable to ADS Holders” in the 2016 Form 20-F.
|
|
|
Risk Factors
|
See “Item 3. Key Information—D. Risk Factors” in the 2016 Form 20-F, “Risk Factors” in this prospectus supplement and other information included and incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of factors you should consider before deciding to invest in our Class B ordinary shares or the ADSs.
|
RISK FACTORS
Investing in our
Class B ordinary shares involves risks. In consultation with your own financial and legal advisors, you should consider carefully,
among other matters, the factors set forth below as well as the risk factors discussed under the caption “Item 3. Key Information
D.—Risk Factors” in the 2016 Form 20-F that are incorporated by reference in the accompanying prospectus before deciding
whether an investment in our Class B ordinary shares or the ADSs is suitable for you. See “Incorporation of Certain Information
by Reference” in this prospectus supplement and in the accompanying prospectus. In general, investing in the securities of
issuers in emerging market countries such as Argentina involves certain risks not typically associated with investing in securities
of U.S. companies. The risks and uncertainties described below and in the 2016 Form 20-F are not the only risks and uncertainties
that we face. Additional risks and uncertainties that are unknown to us or that we currently think are immaterial also may impair
our business operations or the market price of our Class B ordinary shares or the ADSs. This prospectus supplement and the accompanying
prospectus also contain forward-looking statements that involve risks. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including risks described in this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference herein and therein.
Risks Related to the ADSs and the
International Offering
Investors may not
be able to effect service of process within the United States, and enforcement of judgments against us and our respective directors
and executive officers may be difficult.
We are a publicly held
stock corporation (
sociedad anónima
) organized under the laws of Argentina. Most of our directors, senior managers
and assets are located in Argentina. As a result, it may not be possible for investors to effect service of process within the
United States (and generally outside Argentina) upon us or our directors and senior management, or to enforce against us or them
judgments obtained in United States (or other non-Argentine) courts predicated upon the civil liability provisions of the United
States federal securities laws or the federal securities laws of countries other than Argentina. There is no certainty that Argentine
courts will enforce, to the same extent and in as timely a manner as a U.S. or foreign court, an action predicated solely upon
the civil liability provisions of the United States federal securities laws or other foreign regulations brought against such persons
or against us.
You may not receive distributions
on the Class B ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them available
to holders of ADSs.
The Depositary has
agreed to pay to you the cash dividends or other distributions it or the custodian receives on the Class B ordinary shares after
deducting its fees and expenses. You will receive these distributions in proportion to the number of the Class B ordinary shares
your ADSs represent. However, in accordance with the limitations set forth in the Deposit Agreement, it may be unlawful or impractical
to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit the distribution
of the ADSs, Class B ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions
we make on the Class B ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These
restrictions may have a material adverse effect on the value of your ADSs.
Substantial sales of our Class B
ordinary shares or the ADSs after the global offering could cause the price of the Class B ordinary shares or of the ADSs
to decrease.
We have agreed,
subject to certain exceptions, not to sell, offer or otherwise dispose, any Class B ordinary shares or ADSs during a period
commencing on the date of this prospectus supplement and ending 90 days after execution of the underwriting agreement for the
offering without the prior approval of Goldman Sachs & Co. LLC. Our Chairman and Vice Chairman, who collectively held, as
of March 31, 2017, approximately 37.3% of our Class B ordinary shares,
have agreed to similar lock-up provisions, subject to certain exceptions. After these lock-up agreements expire, their
securities will be eligible for sale in the public market. The market price of our Class B ordinary shares or the ADSs
could drop significantly if these persons sell our Class B ordinary shares or the ADSs or the market perceives that they
intend to sell them.
You may suffer dilution, and trading
prices for our Class B ordinary shares or the ADSs may decline.
Purchasers of our Class
B ordinary shares or the ADSs offered by this prospectus may suffer immediate and substantial dilution of their investment to the
extent the price per Class B ordinary share or ADS offered hereunder is higher than the net tangible book value per Class B ordinary
share or ADS, as applicable. See “Dilution” in this prospectus supplement. Additionally, we may issue additional shares
of our capital stock for financing future acquisitions or new projects or for other general corporate purposes. Any such issuance
could result in a dilution of your ownership stake and/or the perception of any such issuances could have an adverse impact on
the market price of the Class B ordinary shares or ADSs.
Your voting rights with respect
to the ADSs are limited by the terms of the Deposit Agreement.
Holders may exercise
voting rights with respect to the Class B ordinary shares underlying ADSs only in accordance with the provisions of the Deposit
Agreement. There are no provisions under Argentine law or under our bylaws that limit ADS holders’ ability to exercise their
voting rights through the depositary with respect to the underlying Class B ordinary shares, except if the depositary is a foreign
entity and it is not registered with the
Inspección General de Justicia
(Superintendency of Legal Entities, or “IGJ”),
although in this case, the Depositary is registered with the IGJ. There are practical limitations upon the ability of ADS holders
to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. For example,
Argentine Law No. 26,831 requires us to notify our shareholders by publication in certain official and private newspapers at least
20 and no more than 45 days in advance of any shareholders’ meeting. ADS holders will not receive any notice of a shareholders’
meeting directly from us. In accordance with the Deposit Agreement, we will provide the notice to the Depositary, which will in
turn, if we so request, as soon as practicable thereafter provide to each ADS holder:
|
·
|
the notice of such meeting;
|
|
·
|
voting instruction forms; and
|
|
·
|
a statement as to the manner in which instructions may be given by holders.
|
To exercise their
voting rights, ADS holders must instruct the Depositary on how to vote the underlying shares. Because of the additional procedural
step involving the depositary, the process for exercising voting rights will take longer for ADS holders than for holders of Class
B ordinary shares.
EXCHANGE
RATES
From 1991 until the
end of 2001, Argentine Law No. 23,928 (the “Convertibility Law”) established a regime under which the Central Bank
was obliged to sell U.S. dollars at a fixed rate of one peso per U.S. dollar and had to maintain a reserve in foreign currencies,
gold and other instruments in an aggregate amount at least equal to the monetary base, which consists of currency in circulation
and peso deposits of the financial sector with the Central Bank.
On January 6, 2002,
the Argentine Congress enacted Law No. 25,561 (as amended and supplemented, the “Public Emergency Law”), formally ending
the regime of the Convertibility Law, abandoning over ten years of U.S. dollar-peso parity and eliminating the Central Bank’s
reserves requirement mentioned above.
The Public Emergency
Law, which has been extended on an annual basis and is in effect until December 31, 2017, granted the Argentine government the
power to set the exchange rate between the peso and foreign currencies and to issue regulations related to the foreign exchange
market. Following a brief period during which the Argentine government established a temporary dual exchange rate system, pursuant
to the Public Emergency Law, the peso was allowed to float freely against other currencies beginning in February 2002. However,
the Central Bank has had the power to intervene in the exchange rate market by buying and selling foreign currency for its own
account, a practice in which it engaged on a regular basis. In recent years and particularly since 2011, the Argentine government
has increased controls on exchange rates and the transfer of funds into and out of Argentina.
With the tightening
of exchange controls beginning in late 2011, in particular with the introduction of measures that allowed limited access to foreign
currency by private companies and individuals (such as requiring authorization from tax authorities to access the foreign currency
exchange market), the implied exchange rate, as reflected in the quotations for Argentine securities that trade in foreign markets,
compared to the corresponding quotations in the local market, increased significantly over the official exchange rate. Most foreign
exchange restrictions were lifted in December 2015, May 2016 and August 2016, reestablishing Argentine residents’ rights
to purchase and remit outside of Argentina foreign currency with no maximum amount and without specific allocation or the need
to obtain prior approval. As a result, since December 2015, the substantial spread between the official exchange rate and the implicit
exchange rate derived from securities transactions has substantially decreased. On December 30, 2016, the Central Bank further
eased foreign exchange controls by eliminating the mandatory repatriation of proceeds from the export of services. On January 4,
2017, the Ministry of the Treasury reduced to zero days the mandatory minimum stay period applicable to (i) the inflow of funds
to the local foreign exchange market arising from certain foreign indebtedness and (ii) any entry of funds to the foreign exchange
market by non-residents.
After several years
of relatively moderate variations in the nominal exchange rate, in 2012 the peso depreciated 14% with respect to the U.S. dollar.
This was followed in 2013 by a 33% depreciation, in 2014 by a 31% depreciation, including a loss of 24% in the month of January,
and in 2015 by a 52% depreciation, primarily after the lifting of restrictions in the month of December and a 22% depreciation
in 2016. We cannot assure you that the peso will not depreciate or appreciate again in the future.
Unless otherwise
indicated, U.S. dollar amounts that have been converted from pesos have been converted at an exchange rate of Ps.15.3818 per U.S.
dollar, the exchange rate in effect on March 31, 2017, as published by the Central Bank.
The following table
sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in pesos per U.S. dollar
and not adjusted for inflation.
|
|
High
|
|
|
Low
|
|
|
Average
(1)
|
|
|
Period End
|
|
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
4.9173
|
|
|
|
4.3048
|
|
|
|
4.5515
|
|
|
|
4.9173
|
|
2013
|
|
|
6.5180
|
|
|
|
4.9228
|
|
|
|
5.4798
|
|
|
|
6.5180
|
|
2014
|
|
|
8.5555
|
|
|
|
6.5430
|
|
|
|
8.1188
|
|
|
|
8.5520
|
|
|
|
High
|
|
|
Low
|
|
|
Average
(1)
|
|
|
Period End
|
|
2015
|
|
|
13.7633
|
|
|
|
8.5537
|
|
|
|
9.2689
|
|
|
|
13.0050
|
|
2016
|
|
|
16.0392
|
|
|
|
13.0692
|
|
|
|
14.7794
|
|
|
|
15.8502
|
|
Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2016
|
|
|
15.4023
|
|
|
|
14.8843
|
|
|
|
15.1007
|
|
|
|
15.2633
|
|
October 2016
|
|
|
15.2250
|
|
|
|
15.1152
|
|
|
|
15.1810
|
|
|
|
15.1745
|
|
November 2016
|
|
|
15.8442
|
|
|
|
15.0183
|
|
|
|
15.3399
|
|
|
|
15.8442
|
|
December 2016
|
|
|
16.0392
|
|
|
|
15.5225
|
|
|
|
15.8296
|
|
|
|
15.8502
|
|
January 2017
|
|
|
16.0533
|
|
|
|
15.8083
|
|
|
|
15.9065
|
|
|
|
15.9117
|
|
February 2017
|
|
|
15.8350
|
|
|
|
15.3675
|
|
|
|
15.5983
|
|
|
|
15.4550
|
|
March 2017
|
|
|
15.6687
|
|
|
|
15.3818
|
|
|
|
15.5287
|
|
|
|
15.3818
|
|
April 2017
|
|
|
15.4532
|
|
|
|
15.1742
|
|
|
|
15.3600
|
|
|
|
15.4268
|
|
May 2017
(2)
|
|
|
16.0975
|
|
|
|
15.2687
|
|
|
|
15.6122
|
|
|
|
16.0975
|
|
Notes:—
|
(1)
|
Based on daily closing price.
|
|
(2)
|
Through May 24, 2017.
|
Source: Central Bank
USE OF PROCEEDS
We estimate that
the net proceeds that we will receive from the global offering will be approximately US$
million, after deducting fees payable to the underwriters and the Argentine placement agent, as well as estimated expenses payable
by us. We intend to use the net proceeds from the global offering for general corporate purposes. Specifically, we seek to be in
a position to fund the expansion of credit demand in Argentina and to take advantage of potential acquisition opportunities in
the Argentine banking and financial system.
CAPITALIZATION
The following table
sets forth our consolidated capitalization as of March 31, 2017, in pesos and U.S. dollars as of March 31, 2017 (i) on an actual
basis, (ii) as adjusted to reflect (a) the issuance by us of 17.500% notes due 2022 in an aggregate principal amount of Ps. 4,620,570,000
on May 8, 2017 and (b) the aggregate dividend of Ps.701,475,633.60 to our shareholders, which was approved at the shareholders’
meeting held on April 28, 2017 and, as of the date of this prospectus supplement, is pending approval by the Central Bank (See
“Prospectus Supplement Summary—April 2017 Dividend” in this prospectus supplement) and (iii) as further adjusted
to reflect the issuance of the Class B ordinary shares, including Class B ordinary shares represented by ADSs, in the global offering.
This table is qualified
in its entirety by reference to, and should be read together with, the information set forth under the captions “Presentation
of certain financial and other information” in the 2016 Form 20-F; “Use of Proceeds” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus supplement; and our unaudited
interim consolidated financial statements as of March 31, 2017 and for the three months ended March 31, 2016 and 2017 incorporated
by reference in this prospectus supplement.
|
|
As of March 31, 2017
|
|
|
As Adjusted for Debt
Issuance and April 2017
Dividend
|
|
|
As Further Adjusted
for the Issuance of Class
B Ordinary Shares
(1)
|
|
|
|
(in thousands
of Ps.,
except
ratios)
|
|
|
(in
thousands of
US$,
except
ratios)
(2)
|
|
|
(in thousands
of Ps.,
except
ratios)
|
|
|
(in
thousands of
US$,
except
ratios)
(2)
|
|
|
(in thousands
of Ps.,
except
ratios)
|
|
|
(in
thousands of
US$,
except
ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from Customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
26,568,117
|
|
|
|
1,727,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
|
48,438,477
|
|
|
|
3,149,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings deposits
|
|
|
27,117,805
|
|
|
|
1,762,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from the government sector
|
|
|
13,007,583
|
|
|
|
845,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from banks
|
|
|
50,869
|
|
|
|
3,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Deposits
|
|
|
115,182,851
|
|
|
|
7,488,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities purchased and securities sold under repurchase agreements
|
|
|
10,098,393
|
|
|
|
656,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Bank
|
|
|
8,383
|
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
331,152
|
|
|
|
21,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
6,173,464
|
|
|
|
401,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
10,761,028
|
|
|
|
699,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest in subsidiaries
|
|
|
198,669
|
|
|
|
12,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Deposits and Debt
|
|
|
142,753,940
|
|
|
|
9,280,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
23,869,943
|
|
|
|
1,551,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2017
|
|
|
As Adjusted for Debt
Issuance and April 2017
Dividend
|
|
|
As Further Adjusted
for the Issuance of Class
B Ordinary Shares
(1)
|
|
|
|
(in millions
of Ps.,
except
ratios)
|
|
|
(in
millions of
US$,
except
ratios)
(2)
|
|
|
(in millions
of Ps.,
except
ratios)
|
|
|
(in
millions of
US$,
except
ratios)
(2)
|
|
|
(in millions
of Ps.,
except
ratios)
|
|
|
(in
millions of
US$,
except
ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Capital Level 1 (COn1)
|
|
|
23,047,550
|
|
|
|
1,498,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deductible Concepts Level 1 (COn1)
|
|
|
(791,949
|
)
|
|
|
(51,486
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Capital Level 1 (CAn1)
|
|
|
12,777
|
|
|
|
831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Level 2 (COn2)
|
|
|
7,113,510
|
|
|
|
462,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Capital :
|
|
|
29,381,888
|
|
|
|
1,910,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Ratio
(3)
|
|
|
14.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Ratio
(4)
|
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:—
|
(1)
|
Adjusted to reflect the proceeds of the global offering, but not the use of proceeds therefrom.
|
|
(2)
|
Peso amounts have been converted into U.S. dollars at an exchange rate of Ps.15.3818 per U.S. dollar,
the exchange rate in effect on March 31, 2017, as published by the Central Bank.
|
|
(3)
|
Regulatory capital as a percentage of credit risk-weighted assets.
|
|
(4)
|
Regulatory capital as a percentage of risk weighted assets considering total capital requirements.
|
DILUTION
At March 31, 2017,
we had a net tangible book value of Ps.23,110.9 million (our total tangible assets minus our total liabilities), corresponding
to a net tangible book value of Ps.39.54 per Class B ordinary share or Ps.395.4 per ADS (US$2.57 per Class B ordinary share or
US$25.71 per ADS, using the reference exchange rate published by the Central Bank at March 31, 2017 for pesos into U.S. dollars
of Ps.15.3818 to US$1.00 and the ratio of 10 Class B ordinary shares to one ADS). Net tangible book value per share represents
the amount of our total tangible assets, minus our total liabilities, divided by the total number of our shares outstanding at
March 31, 2017.
After giving effect
to the sale by us of 74,000,000 Class B ordinary shares offered by us in the global offering, and assuming (i) an offering price
of US$ per Class B ordinary share, the last reported sale price per class B ordinary share on the BYMA on , 2017 (and assuming
that ADSs are offered in the global offering at 10 times that price, reflecting the ratio of Class B ordinary shares per ADS),
and (ii) that the underwriters have not exercised the option to purchase additional Class B ordinary shares, and after deducting
the estimated underwriting discounts and estimated offering expenses payable by us of US$ million or US$ per Class B ordinary share,
which represents % of the gross proceeds to us, our estimated book value at March 31, 2017 would have been approximately Ps. million,
representing US$ per Class B ordinary share, or US$ per ADS. This represents an immediate increase in net tangible book value of
US$ per Class B ordinary share, or US$ per ADS, to existing shareholders and an immediate dilution in net tangible book value of
US$ per Class B ordinary share, or US$ per ADS, to new investors purchasing Class B ordinary shares or ADSs in the global offering.
Dilution for this purpose represents the difference between the price per Class B ordinary share or ADS paid by these purchasers
and net tangible book value per Class B ordinary share or ADS immediately after the completion of the global offering. Amounts
in this paragraph are calculated using the reference exchange rate published by the Central Bank at March 31, 2017 for pesos into
U.S. dollars of Ps.15.3818 to US$1.00.
The following table
illustrates this dilution to new investors purchasing Class B ordinary shares, including Class B ordinary shares represented by
ADSs, in the global offering:
|
|
As of March 31, 2017
|
|
|
|
Class B
Ordinary
Shares
(in Ps.)
|
|
|
ADSs
(in US$)
|
|
Net tangible book value per Class B ordinary share or ADS
|
|
|
39.54
|
|
|
|
25.70
|
|
Increase in net tangible book value per Class B ordinary share or ADS attributable to new investors
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value per Class B ordinary share or ADS after the global offering
|
|
|
|
|
|
|
|
|
Dilution per Class B ordinary share or ADS to new investors
|
|
|
|
|
|
|
|
|
Percentage of dilution in net tangible book value per Class B ordinary share or ADS for new investors
(1)
|
|
|
|
|
|
|
|
|
Note:—
|
(1)
|
Percentage of dilution for new investors is calculated by dividing the dilution in net tangible
book value for new investors by the price of the offering.
|
If the underwriters exercise their option to purchase additional Class B ordinary shares including Class
B ordinary shares represented by ADSs, in full, the number of shares of Class B ordinary shares held by existing shareholders will
be reduced to % of the total number of shares of Class B ordinary shares to be outstanding after the global offering, and the number
of shares of Class B ordinary shares held by the new investors will be increased to Class B ordinary shares or % of the total number
of shares of Class B ordinary shares outstanding after the global offering.
MARKET PRICE
OF OUR CLASS B ORDINARY SHARES AND
AMERICAN DEPOSITARY RECEIPTS
The table below shows
the high and low market prices in pesos for our Class B ordinary shares on the BYMA for the periods indicated:
|
|
Ps. per Class B
Ordinary Share
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
2012
|
|
|
12.50
|
|
|
|
7.35
|
|
2013
|
|
|
30.25
|
|
|
|
10.70
|
|
2014
|
|
|
61.00
|
|
|
|
19.00
|
|
2015
|
|
|
103.00
|
|
|
|
45.00
|
|
2016
|
|
|
123.50
|
|
|
|
73.30
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
1st quarter
|
|
|
80.00
|
|
|
|
45.00
|
|
2nd quarter
|
|
|
72.00
|
|
|
|
54.40
|
|
3rd quarter
|
|
|
69.30
|
|
|
|
47.55
|
|
4th quarter
|
|
|
103.00
|
|
|
|
50.00
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
1st quarter
|
|
|
117.50
|
|
|
|
73.30
|
|
2nd quarter
|
|
|
112.10
|
|
|
|
82.00
|
|
3rd quarter
|
|
|
123.00
|
|
|
|
107.10
|
|
4th quarter
|
|
|
123.50
|
|
|
|
95.10
|
|
|
|
|
|
|
|
|
|
|
2016:
|
|
|
|
|
|
|
|
|
December
|
|
|
114.00
|
|
|
|
95.10
|
|
|
|
|
|
|
|
|
|
|
2017:
|
|
|
|
|
|
|
|
|
January
|
|
|
126.00
|
|
|
|
102.70
|
|
February
|
|
|
134.50
|
|
|
|
118.00
|
|
March
|
|
|
134.95
|
|
|
|
122.5
|
|
April
|
|
|
137.70
|
|
|
|
127.15
|
|
May
(1)
|
|
|
142.00
|
|
|
|
131.50
|
|
Notes:—
|
(1)
|
Through May 24, 2017.
|
Source:
Yahoo Finance
The ADSs issued by
The Bank of New York Mellon, as Depositary under the Deposit Agreement, trade on the NYSE. Each ADS represents 10 Class B
ordinary shares. The table below shows the high and low market prices of the ADSs in U.S. dollars on the NYSE for the periods indicated.
|
|
US$ per ADS
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
2012
|
|
|
27.06
|
|
|
|
10.79
|
|
2013
|
|
|
32.85
|
|
|
|
13.53
|
|
2014
|
|
|
51.96
|
|
|
|
16.42
|
|
2015
|
|
|
69.75
|
|
|
|
35.93
|
|
2016
|
|
|
83.18
|
|
|
|
52.88
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
1st quarter
|
|
|
67.00
|
|
|
|
38.00
|
|
2nd quarter
|
|
|
59.74
|
|
|
|
43.90
|
|
3rd quarter
|
|
|
51.97
|
|
|
|
36.25
|
|
4th quarter
|
|
|
69.75
|
|
|
|
35.93
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
1st quarter
|
|
|
74.64
|
|
|
|
52.88
|
|
2nd quarter
|
|
|
76.27
|
|
|
|
56.87
|
|
3rd quarter
|
|
|
83.18
|
|
|
|
71.41
|
|
4th quarter
|
|
|
81.41
|
|
|
|
61.12
|
|
|
|
|
|
|
|
|
|
|
2016:
|
|
|
|
|
|
|
|
|
October
|
|
|
81.41
|
|
|
|
75.78
|
|
November
|
|
|
77.68
|
|
|
|
64.70
|
|
December
|
|
|
72.15
|
|
|
|
61.12
|
|
|
|
|
|
|
|
|
|
|
2017:
|
|
|
|
|
|
|
|
|
January
|
|
|
78.79
|
|
|
|
66.34
|
|
February
|
|
|
87.00
|
|
|
|
74.34
|
|
March
|
|
|
86.90
|
|
|
|
77.55
|
|
April
|
|
|
89.45
|
|
|
|
84.00
|
|
May
(1)
|
|
|
88.41
|
|
|
|
86.73
|
|
Note:—
|
(2)
|
Through May 25, 2017.
|
Source: Yahoo Finance
MANAGEMENT’S
DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following
discussion is based on, and should be read in conjunction with, our consolidated financial statements and related notes incorporated
by reference in the accompanying prospectus and in the 2016 Form 20-F under the captions “Item 5. Operating and Financial
Review and Prospects,” “Item 3. Key Information—A. Selected Financial Data” and the other financial information
appearing in the 2016 Form 20-F. As more fully described in “Presentation of certain financial and other information”
in the 2016 Form 20-F, our consolidated financial statements are prepared in conformity with Central Bank Rules, which differ in
certain respects from U.S. GAAP.
Overview
We are one of the
leading banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products
and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and
by our focus on low- and middle-income individuals and small- and medium-sized businesses, generally located outside of the City
of Buenos Aires. We believe this strategy offers significant opportunity for continued growth in our banking business. According
to the Central Bank, as of January 1, 2017, we were ranked first in terms of branches and equity, third in terms of total loans
and fourth in terms of total deposits among private banks in Argentina.
Factors Affecting Results of Operations
Inflation in Argentina
In accordance with
Central Bank Rules, our consolidated financial statements have not been adjusted to reflect inflation. Inflation could nevertheless
affect the comparability of our results as reflected in this prospectus supplement and may affect our results of operations going
forward. The rate of inflation during 2013, 2014 and the 10-month period ended October 31, 2015, as measured by the variations
in the consumer price index (the “CPI”) according to the
Instituto Nacional de Estadística y Censos
(the
“INDEC”), was 10.9%, 23.9% and 11.9% respectively. In November 2015, the INDEC suspended the publication of the CPI.
The new administration released an alternative CPI based on data from the City of Buenos Aires and the Province of San Luis while
it worked on a new inflation index. According to publicly available information based on data from the Province of San Luis, the
CPI grew by 31.6% in 2015 and the inflation rate was 6.5%, 4.2%, 2.7%, 3.0% and 3.4% in December 2015 and January, February, March
and April 2016, respectively. According to publicly available information based on data from the City of Buenos Aires, the CPI
grew by 26.9% in 2015 and the inflation rate was 3.9%, 4.1%, 4.0%, 3.3% and 6.5% in December 2015 and January, February, March
and April 2016, respectively. After implementing certain methodological reforms and adjusting certain macroeconomic statistics
on the basis of these reforms, in June 2016 the INDEC resumed its CPI publications. According to the INDEC, Argentina’s rate
of inflation for May, June, July, August, September, October, November and December 2016 was 4.2%, 3.1%, 2.0%, 0.2%, 1.1%, 2.4%,
1.6% and 1.2%, respectively and for January, February, March and April 2017 was 1.3%, 2.5%, 2.4% and 2.6%, respectively.
The accuracy of the measurements of inflation by the INDEC has been called into question, and the actual inflation for
2015 and previous years could be substantially higher than that indicated by the INDEC. In addition, despite recent reforms, there
remains uncertainty as to whether official data and measurement procedures sufficiently reflect inflation in the country, and what
effect these reforms will have on the Argentine economy.
Argentine Economic Conditions
As the majority of
our assets, revenues, operations and customers are located in Argentina, our results of operations and financial condition are
affected to a significant extent by the macroeconomic and political conditions in the country. During 2014, the Argentine economy
contracted by 2.5%; however, in 2015, the Argentine economy grew by 2.6%. According to the INDEC, the Argentine economy contracted
by 2.3% in 2016. Volatility in the Argentine economy and measures taken by the Argentine government have had, and are expected
to continue to have, a significant impact on us.
The following table
sets forth key economic indicators in Argentina during the periods indicated:
|
|
Year Ended December 31,
|
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
Real gross domestic product (“GDP”) (% change)
|
|
|
(2.6
|
)
|
|
|
2.4
|
(1)
|
|
|
(2.3
|
)
|
Consumer price index (% change)
|
|
|
23.9
|
|
|
|
11.9
|
(2)
|
|
|
39.2
|
(2)
|
Trade balance (US$ in millions)
|
|
|
6,653
|
|
|
|
(1,110.0
|
)
|
|
|
2,128
|
|
Primary fiscal balance (excludes interest) (as % of GDP)
|
|
|
(0.9
|
)
|
|
|
(5.4
|
)
|
|
|
(4.1
|
)
|
Public debt (% of GDP at December 31)
|
|
|
43.0
|
|
|
|
26.0
|
|
|
|
46.3
|
|
Unemployment rate-end of period (% change)
|
|
|
6.9
|
|
|
|
5.9
|
|
|
|
7.6
|
(3)
|
Notes:—
|
(1)
|
Data published by the INDEC on June 29, 2016.
|
|
(2)
|
Data published by the INDEC for the 10 months ended October 31, 2015. As of the date of this prospectus
supplement, no 2015 year-end data has been made publicly available. In June 2016, the INDEC resumed its CPI publications and published
that, according to the INDEC, CPI for May, June, July, August, September, October, November and December 2016 was 4.2%, 3.1%, 2.0%,
0.2%, 1.1%, 2.4%, 1.6% and 1.2%, respectively and for January, February, March and April 2017 was 1.3%, 2.5%, 2.4% and 2.6%, respectively.
See “Item 3. Key Information—D. Risk Factors–Risks relating to Argentina” in the 2016 20-F.
|
|
(3)
|
As of September 30, 2016.
|
Dividends
For the years ended
December 31, 2014 and 2015, we received authorization from the Central Bank to distribute the amounts of Ps.227.7 million (Ps.0.3895
per share) and Ps.643.0 million (Ps.1.10 per share), respectively. These amounts were paid in March 2016 and August 2016, respectively.
On March 8, 2017, the Board of Directors proposed a dividend payment of Ps.701,475,633.60, which was approved at the shareholders’
meeting held on April 28, 2017 and is pending approval by the Central Bank as of the date of this prospectus supplement.
Three Months Ended March 31, 2017
Compared to the Three Months Ended March 31, 2016
The following discussion
of our results of operations is for the Bank as a whole and without reference to any operating segments. We have a holistic approach
to our banking business; we do not manage the Bank by segments or divisions or by customer categories, by products and services,
by regions, or by any other segmentation for the purpose of allocating resources and assessing profitability.
The following table
sets forth the components of our income statement for the three months ended March 31, 2016 and 2017:
|
|
Three months Ended
March 31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2017-2016
|
|
|
|
(in thousands of pesos)
|
|
Financial income
|
|
|
6,419,245
|
|
|
|
7,600,382
|
|
|
|
1,181,137
|
|
Financial expenses
|
|
|
(3,153,905
|
)
|
|
|
(2,960,035
|
)
|
|
|
193,870
|
|
Gross intermediation margin
|
|
|
3,265,340
|
|
|
|
4,640,347
|
|
|
|
1,375,007
|
|
Provision for loan losses
|
|
|
(178,233
|
)
|
|
|
(361,244
|
)
|
|
|
(183,011
|
)
|
Service charge income
|
|
|
1,737,881
|
|
|
|
2,401,304
|
|
|
|
663,423
|
|
|
|
Three months Ended
March 31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2017-2016
|
|
|
|
(in thousands of pesos)
|
|
Service charge expense
|
|
|
(575,815
|
)
|
|
|
(734,324
|
)
|
|
|
(158,509
|
)
|
Administrative expenses
|
|
|
(2,120,934
|
)
|
|
|
(2,963,533
|
)
|
|
|
(842,599
|
)
|
Net other income (expenses)
|
|
|
52,420
|
|
|
|
(793
|
)
|
|
|
(53,213
|
)
|
Minority interest in subsidiaries
|
|
|
(10,646
|
)
|
|
|
(15,844
|
)
|
|
|
(5,198
|
)
|
Net income before income tax
|
|
|
2,170,013
|
|
|
|
2,965,913
|
|
|
|
795,900
|
|
Income tax
|
|
|
(762,384
|
)
|
|
|
(1,201,868
|
)
|
|
|
(439,484
|
)
|
Net income
|
|
|
1,407,629
|
|
|
|
1,764,045
|
|
|
|
356,416
|
|
Net Income
Our consolidated
net income for the three months ended March 31, 2017 increased 25%, or Ps.356.4 million, as compared to the three months ended
March 31, 2016.
Financial
Income
The components of
our financial income for the three months ended March 31, 2016 and 2017 were as follows:
|
|
Three Months Ended March
31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2017-2016
|
|
|
|
(in thousands of pesos)
|
|
Interest on cash and due from banks
|
|
|
332
|
|
|
|
796
|
|
|
|
464
|
|
Interest on loans to the financial sector
|
|
|
32,762
|
|
|
|
101,182
|
|
|
|
68,420
|
|
Interest on overdrafts
|
|
|
520,273
|
|
|
|
650,402
|
|
|
|
130,129
|
|
Interest on documents
(1)
|
|
|
395,427
|
|
|
|
374,005
|
|
|
|
(21,422
|
)
|
Interest on mortgage loans
|
|
|
184,877
|
|
|
|
179,022
|
|
|
|
(5,855
|
)
|
Interest on pledged loans
(2)
|
|
|
100,465
|
|
|
|
97,717
|
|
|
|
(2,748
|
)
|
Interest on credit card loans
|
|
|
919,302
|
|
|
|
1,071,843
|
|
|
|
152,541
|
|
Interest on financial leases
|
|
|
23,474
|
|
|
|
20,090
|
|
|
|
(3,384
|
)
|
Interest on other loans
(3)
|
|
|
2,784,929
|
|
|
|
3,565,407
|
|
|
|
780,478
|
|
Income from government and private securities, net
|
|
|
1,015,637
|
|
|
|
868,903
|
|
|
|
(146,734
|
)
|
Interest on other receivables from financial intermediation
|
|
|
1,191
|
|
|
|
936
|
|
|
|
(255
|
)
|
Income from guaranteed loans
(4)
|
|
|
6,961
|
|
|
|
3,073
|
|
|
|
(3,888
|
)
|
CER (Indexation by benchmark stabilization coefficient) adjustment
(5)
|
|
|
56,933
|
|
|
|
28,636
|
|
|
|
(28,297
|
)
|
CVS (Indexation by salary variation coefficient) adjustment
|
|
|
226
|
|
|
|
111
|
|
|
|
(115
|
)
|
Difference in quoted prices of gold and foreign currency
|
|
|
258,783
|
|
|
|
159,548
|
|
|
|
(99,235
|
)
|
Other
(6)
|
|
|
117,673
|
|
|
|
478,711
|
|
|
|
361,038
|
|
Total financial income
|
|
|
6,419,245
|
|
|
|
7,600,382
|
|
|
|
1,181,137
|
|
Notes:—
|
(1)
|
Includes income on factoring, check cashing advances and loans with promissory notes.
|
|
(2)
|
Primarily includes income on interest on loans with pledged collateral.
|
|
(3)
|
Includes interest on loans not classified under prior headings, including interest on personal
loans.
|
|
(4)
|
Includes income on loans to the Argentine government that were issued in exchange for federal and
provincial government bonds.
|
|
(5)
|
Includes “CER” (a benchmark stabilization coefficient, which is an index issued by
the Argentine government used to adjust value of credits and deposits) accrued for all assets subject to CER adjustments.
|
|
(6)
|
Consists mainly of results from forward foreign currency settled transactions and premiums for
reverse repo transactions.
|
Our financial income
increased 18%, or Ps.1,181.1 million, during three months ended March 31, 2017 as compared to the three months ended March 31,
2016, driven primarily by higher income from interest on loans – which includes interest on overdrafts, documents, mortgage
loans, pledged loans, credit card loans, financial leases and other loans – and from financial income, other.
Interest on loans
grew 22%, or Ps.1,098.2 million, as a result of an increase of 42% in the average loan portfolio due to volume growth that was
partially offset by a decrease in the average interest rate. The average interest rate for private sector loans decreased from
31.7% for the three months ended March 31, 2016 to 27.4% for the three months ended March 31, 2017.
The main variation
of total interest on loans was from other loans (including interest on personal loans) which increased 28%, from interest on credit
card loans which increased 17% and interest on overdrafts which increased 25% during the three months ended March 31, 2017 as
compared to the three months ended March 31, 2016. The average volume of personal loans increased 32%, the average volume of credit
card loans increased 32% and the average volume of overdrafts increased 59%, in each case as compared to the average volume for
the three months ended March 31, 2016.
Income from
government and private securities decreased 14%, or Ps.146.7 million, mainly due to a decrease in the average government
securities portfolio by 15% and in our private securities portfolio by 69% as a result of a disposal by us of our private
equity securities portfolio during the three months ended March 31, 2017.
Financial income,
other increased 307%, or Ps.361 million, mainly due to the increase in premiums for reverse repurchase agreements associated with
the higher volume of operations, which grew significantly during the three months ended March 31, 2017 as compared to the three
months ended March 31, 2016.
The following tables
set forth the changes in financial income due to increases (or decreases) in volume and increases (or decreases) in nominal rates
of average interest-earning assets. Such financial income excludes exchange valuation differences and income on forward sales of
foreign exchange:
Changes in financial income (interest earned)
|
|
|
|
|
|
Three Months
Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Due to changes in the volume of interest-earning assets
|
|
|
1,944,972
|
|
Due to changes in average nominal rates of interest-earning assets
|
|
|
(617,079
|
)
|
Net change
|
|
|
1,327,893
|
|
Changes in financial income due to changes in volume
|
|
|
|
|
|
Three Months
Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Government securities
|
|
|
(64,672
|
)
|
Loans to private and financial sector
|
|
|
1,696,700
|
|
Other assets
|
|
|
312,944
|
|
Net change
|
|
|
1,944,972
|
|
Changes in financial income due to changes in nominal rates
|
|
|
|
|
|
Three Months
Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Government securities
|
|
|
(2,494
|
)
|
Loans to private and financial sector
|
|
|
(602,342
|
)
|
Other assets
|
|
|
(12,243
|
)
|
Net change
|
|
|
617,079
|
|
Financial
Expenses
The components of
our financial expenses for the three months ended March 31, 2016 and 2017 were as follows:
|
|
Three Months Ended
March 31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2017-2016
|
|
|
|
(in thousands of pesos)
|
|
Interest on savings accounts
|
|
|
20,656
|
|
|
|
23,971
|
|
|
|
3,315
|
|
Interest on time deposits
|
|
|
2,453,567
|
|
|
|
2,109,783
|
|
|
|
(343,784
|
)
|
Interest on interfinancing received loans (received call)
|
|
|
1,043
|
|
|
|
1,378
|
|
|
|
335
|
|
Interest on other financing from the financial institutions
|
|
|
51
|
|
|
|
5
|
|
|
|
(46
|
)
|
Interest on other liabilities from financial intermediation
(1)
|
|
|
35,671
|
|
|
|
16,211
|
|
|
|
(19,460
|
)
|
Interest on subordinated corporate bonds
|
|
|
53,629
|
|
|
|
105,168
|
|
|
|
51,539
|
|
Other interest
|
|
|
912
|
|
|
|
678
|
|
|
|
(234
|
)
|
CER adjustment
(2)
|
|
|
3,473
|
|
|
|
2,838
|
|
|
|
(635
|
)
|
Contribution to Deposit Guarantee Fund
|
|
|
96,449
|
|
|
|
49,428
|
|
|
|
(47,021
|
)
|
Other
(3)
|
|
|
488,454
|
|
|
|
650,575
|
|
|
|
162,121
|
|
Total financial expenses
|
|
|
3,153,905
|
|
|
|
2,960,035
|
|
|
|
(193,870
|
)
|
Notes:—
|
(1)
|
Includes lines of credit from other banks and interest on debt securities.
|
|
(2)
|
Includes CER accrued for all the liabilities subject to CER adjustments.
|
|
(3)
|
Mainly resulting from turnover tax.
|
Financial expenses
decreased 6%, or Ps.193.9 million, during the three months ended March 31, 2017 as compared to the three months ended March 31,
2016.
Interest on time
deposits represented 72% of total financial expenses and decreased 14%, or Ps.340.5 million, during the three months ended March
31, 2017 as compared to the three months ended March 31, 2016, due to a decrease in the average time deposit interest rate (from
23.2% on average for the three months ended March 31, 2016 to 15.8% on average for the three months ended March 31, 2017) that
was partially offset by an increase in the average volume of time deposits of 27%.
Financial expenses,
other increased 33% during the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 due principally
to an increase in turnover tax, which was mainly due to an increase in the tax base and, to a lesser extent, to an increase in
the tax rates of certain provinces in which we operate.
The contribution
to the Deposit Guarantee Fund decreased 49% during the three months ended March 31, 2017 compared to the three months ended March
31, 2016 due to a decrease in the contribution rate set by the Central Bank as of April 2016.
The following tables
set forth the changes in financial expense as specified below for the periods indicated:
Changes in financial expense (interest paid)
|
|
|
|
|
|
Three Months Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Financial expense due to changes in the volume of interest-bearing liabilities
|
|
|
714,125
|
|
Financial expense due to changes in average nominal rates of interest-bearing liabilities
|
|
|
(1,005,909
|
)
|
Net change
|
|
|
(291,784
|
)
|
Changes in financial expense due to changes in volume
|
|
|
|
|
|
Three Months Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Deposits
|
|
|
612,833
|
|
Borrowings from Central Bank and other financial institutions
|
|
|
26,815
|
|
Corporate bonds
|
|
|
74,477
|
|
Net change
|
|
|
714,125
|
|
Changes in financial expense due to changes in nominal rates
|
|
|
|
|
|
Three Months Ended
March 31, 2017
vs.
March 31, 2016
|
|
|
|
Increase (Decrease)
(in thousands of pesos)
|
|
Deposits
|
|
|
(951,502
|
)
|
Borrowings from Central Bank and other financial institutions
|
|
|
(10,087
|
)
|
Corporate bonds
|
|
|
(44,320
|
)
|
Net change
|
|
|
(1,005,909
|
)
|
Provision
for Loan Losses
Provision for loan
losses increased 103%, or Ps.183 million, during the three months ended March 31, 2017 as compared to the three months ended March
31, 2016, mainly as a result of the 42% increase in the private sector loan portfolio and the increase in provisions for non-performing
consumer loans, primarily due to deterioration in the quality of the portfolio.
Service
Charge Income
The following table
provides a breakdown of our service charge income by expense category for the three months ended March 31, 2016 and 2017:
|
|
Three Months Ended March
31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2016-2017
|
|
|
|
(in thousands of pesos)
|
|
Service charges on deposit accounts
|
|
|
959,278
|
|
|
|
1,292,315
|
|
|
|
333,037
|
|
Debit and credit card income
|
|
|
537,113
|
|
|
|
780,171
|
|
|
|
243,058
|
|
Other fees related to foreign trade
|
|
|
38,839
|
|
|
|
32,973
|
|
|
|
(5,866
|
)
|
Loan-related fees
|
|
|
17,378
|
|
|
|
55,871
|
|
|
|
38,493
|
|
Capital markets and securities activities
|
|
|
6,968
|
|
|
|
10,829
|
|
|
|
3,861
|
|
Lease of safe-deposit boxes
|
|
|
26,728
|
|
|
|
37,414
|
|
|
|
10,686
|
|
Fees related to guarantees
|
|
|
260
|
|
|
|
458
|
|
|
|
198
|
|
Other
(1)
|
|
|
151,317
|
|
|
|
191,273
|
|
|
|
39,956
|
|
Total service charge income
|
|
|
1,737,881
|
|
|
|
2,401,304
|
|
|
|
663,423
|
|
Note:—
|
(1)
|
Includes insurance income and revenue from joint ventures.
|
Service charge income
increased 38%, or Ps.663.4 million, during the three months ended March 31, 2017 as compared to the three months ended March 31,
2016, mainly due to a 35% increase in service charges on deposits accounts as the result of a greater number of current accounts
and the increase in the rates charged and a 45% increase in debit and credit card income as a result of the increases in purchases
made with both debit and credit cards.
Service
Charge Expenses
Service charge expenses
increased 28%, or Ps.158.5 million, during the three months ended March 31, 2017 as compared to the three months ended March 31,
2016, mainly due to the increase in the cost of services provided by credit and debit card companies and in a lesser extent due
to the regulatory change established by the Central Bank in relation to insurance costs. The Central Bank established that, for
financings granted as from September 1, 2016, financial institutions may not charge commissions or charge customers for life insurance
costs in respect of any debit balances, and financial institutions must choose to either assume the risk or cover the risk at their
own cost by contracting an insurance policy. During the three months ended March 31, 2017, we recorded the costs of contracted
insurance. As from April 1, 2017, we have opted not to contract an insurance policy but rather have assumed the risk.
Administrative
Expenses
The components of
our administrative expenses for the three months ended March 31, 2016 and 2017 are reflected in the following table:
|
|
Three Months Ended March
31,
|
|
|
Change
March 31,
|
|
|
|
2016
|
|
|
2017
|
|
|
2016-2017
|
|
|
|
(in thousands of pesos)
|
|
Personnel expenses
|
|
|
1,245,604
|
|
|
|
1,844,878
|
|
|
|
599,274
|
|
Directors and statutory auditors’ fees
|
|
|
67,571
|
|
|
|
86,718
|
|
|
|
19,147
|
|
Other professional fees
|
|
|
57,891
|
|
|
|
78,035
|
|
|
|
20,144
|
|
Advertising and publicity
|
|
|
47,829
|
|
|
|
43,485
|
|
|
|
(4,344
|
)
|
Taxes
|
|
|
115,146
|
|
|
|
162,473
|
|
|
|
47,327
|
|
Depreciation of equipment
|
|
|
46,360
|
|
|
|
59,043
|
|
|
|
12,683
|
|
Amortization of organization costs
|
|
|
43,286
|
|
|
|
60,128
|
|
|
|
16,842
|
|
Other operating expenses
|
|
|
318,662
|
|
|
|
399,517
|
|
|
|
80,855
|
|
Other
|
|
|
178,585
|
|
|
|
229,256
|
|
|
|
50,671
|
|
Total administrative expenses
|
|
|
2,120,934
|
|
|
|
2,963,533
|
|
|
|
842,599
|
|
Administrative expenses
increased 40%, or Ps.842.6 million, during the three months ended March 31, 2017 as compared to the three months ended March 31,
2016, mainly due to increased personnel expenses and other administrative expenses.
Personnel expenses
increased 48%, or Ps.599.3 million, due to collective bargaining agreements being finalized in different fiscal quarters in 2016
and 2017. . Had the collective bargaining agreements finalized in April 2016 been finalized in the first fiscal quarter of 2016,
rather than the second, the resulting increase in personnel expense would have been 24% during the three months ended March 31,
2017 as compared to the three months ended March 31, 2016. The remaining administrative expenses increased 28%, or Ps.243.3 million,
in line with annual recorded inflation.
Net
Other Income (Expense)
For the three months ended March 31, 2017,
net other income amounted to a loss of Ps.0.8 million. The decrease of Ps.53.1 million as compared to the three months ended March
31, 2016 was mainly due to a 67%, or Ps.58.5 million, increase in total other expense, mainly due to the increase in charges for
the uncollectability of other receivables and other allowances.
Income
Tax
During the three
months ended March 31, 2017 income tax expenses increased 58%, or Ps.439.5 million, as compared to the three months ended March
31, 2016, with a tax effective rate of 40.5% and 35.1% for the three months ended March 31, 2017 and 2016, respectively. The higher
tax rate for the three months ended March 31, 2017 was due to income tax being paid on the collection of guaranteed loans and the
portfolio of securities being sold.
PRINCIPAL
SHAREHOLDERS
As of March 31, 2017,
we had 584,563,028 outstanding shares of capital stock, consisting of 11,235,670 Class A shares and 573,327,358 Class B ordinary
shares. Each share represents the same economic interests, except that holders of our Class A shares are entitled to five
votes per share and holders of our Class B ordinary shares are entitled to one vote per share. Other than aforementioned difference
between the voting rights of the Class A shares and the Class B ordinary shares, the holders of these shares listed in
the table below do not have different voting rights.
The following table
sets forth information regarding the beneficial ownership of our Class A and Class B ordinary shares as of March 31, 2017:
Shareholder Name
(1)
|
|
Number of
Class A
Shares
|
|
|
Number of
Class B
Ordinary
Shares
|
|
|
Total
Number of
Shares
|
|
|
Percentage
of Capital
Stock
(%)
|
|
|
Percentage
of Voting
Rights
(%)
|
|
ANSES (as manager of the
Fondo de Garantía de Sustentabilidad
)
|
|
|
—
|
|
|
|
184,120,650
|
|
|
|
184,120,650
|
|
|
|
31.50
|
%
|
|
|
29.25
|
%
|
Jorge Horacio Brito
|
|
|
5,366,463
|
|
|
|
107,021,816
|
|
|
|
112,388,279
|
|
|
|
19.23
|
%
|
|
|
21.26
|
%
|
Delfín Jorge Ezequiel Carballo
|
|
|
4,895,416
|
|
|
|
106,805,523
|
|
|
|
111,700,939
|
|
|
|
19.11
|
%
|
|
|
20.85
|
%
|
Others
(2)
|
|
|
973,791
|
|
|
|
175,379,369
|
|
|
|
176,353,160
|
|
|
|
30.17
|
%
|
|
|
28.63
|
%
|
Total
|
|
|
11,235,670
|
|
|
|
573,327,358
|
|
|
|
584,563,028
|
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
Notes:—
|
(1)
|
None of our directors or members of our senior management beneficially own any of our capital stock,
except that Delfín Federico Ezequiel Carballo, the son of Delfin Jorge Ezequiel Carballo, our Vice Chairman, Jorge Pablo
Brito, the son of Jorge Horacio Brito, our Chairman, and Alberto Figueroa, our comprehensive risk management manager each own less
than 1% of our total outstanding shares.
|
|
(2)
|
Includes The Bank of New York Mellon, as Depositary for the ADSs.
|
Jorge Horacio Brito
and Delfín Jorge Ezequiel Carballo have assigned all of their preferential rights, including their preemptive rights and
accretion rights, to subscribe for Class B ordinary shares with respect to the capital increase to the Argentine placement agent
and, in order to facilitate the international offering, the Argentine placement agent, at the discretion of the underwriters,
will exercise these rights to purchase Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be sold
by us in the international offering.
TAXATION
Material U.S. Federal Income Tax Considerations
The following discussion
is a summary of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our
Class B ordinary shares or ADSs. This discussion applies only to beneficial owners of Class B ordinary shares or ADSs that are
“U.S. holders” (as defined below) that hold Class B ordinary shares or ADSs as “capital assets” (generally,
property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”),
final, temporary and proposed Treasury regulations, administrative pronouncements of the U.S. Internal Revenue Service (“IRS”)
and judicial decisions, all as of the date hereof and all of which are subject to change (possibly on a retroactive basis) and
to different interpretations. This discussion does not purport to address all U.S. federal income tax considerations that may be
relevant to a particular U.S. holder (including consequences under the alternative minimum tax or the Medicare tax on net investment
income) and you are urged to consult your own tax advisor regarding your specific tax situation. The discussion does not address
the tax considerations that may be relevant to U.S. holders in special tax situations, such as:
|
·
|
dealers in securities or currencies;
|
|
·
|
individual retirement accounts and other tax deferred accounts;
|
|
·
|
tax-exempt organizations;
|
|
·
|
traders in securities that elect to mark to market;
|
|
·
|
certain financial institutions;
|
|
·
|
entities or arrangements treated as partnerships or other pass-through entities for U.S. federal
income tax purposes;
|
|
·
|
holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
|
|
·
|
holders that hold Class B ordinary shares or ADSs as part of a hedge, straddle, conversion transaction,
constructive sale transaction or other integrated transaction;
|
|
·
|
holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting
power of our shares;
|
|
·
|
real estate investment trusts; or
|
|
·
|
regulated investment companies.
|
This discussion does
not address the estate or gift tax consequences of holding Class B ordinary shares or ADSs or the indirect consequences to holders
of equity interests in entities or arrangements treated as partnerships for U.S. federal income tax purposes that own our Class
B ordinary shares or ADSs. Moreover, this discussion does not address the state, local, or non-U.S. income or other tax consequences
of an investment in our Class B ordinary shares or ADSs, or any aspect of U.S. federal taxation other than income taxation.
Except as otherwise
noted, this discussion assumes that we are not a passive foreign investment company (a “PFIC”) for U.S. federal income
tax purposes. Our possible status as a PFIC must be determined annually and therefore may be subject to change. If we were to be
a PFIC in any year, materially adverse consequences could result for U.S. holders. See “—Passive Foreign Investment
Company Considerations” below. For the purposes of this discussion, you are a “U.S. holder” if you are a beneficial
owner of Class B ordinary shares or ADSs and you are for U.S. federal income tax purposes:
|
·
|
an individual who is a citizen or resident of the United States;
|
|
·
|
a corporation created or organized in or under the laws of the United States, any state thereof
or the District of Columbia;
|
|
·
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source;
or
|
|
·
|
a trust if (i) a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust
or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
|
If an entity or arrangement
treated as a partnership for U.S. federal income tax purposes holds our Class B ordinary shares or ADSs, the tax treatment of a
partner in such partnership will generally depend upon the status of the partner and upon the activities of the partnership. Any
partner of an entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds our Class B ordinary
shares or ADSs should consult its own tax advisor.
In general, for U.S.
federal income tax purposes, U.S. holders that are beneficial owners of ADSs will be treated as the beneficial owners of the Class
B ordinary shares represented by those ADSs. No gain or loss will be recognized on the exchange of ADSs for the U.S. holder’s
proportionate interest in Class B ordinary shares. A U.S. holder’s tax basis in the Class B ordinary shares received will
be the same as the U.S. holder’s tax basis in the ADSs surrendered, and the holding period of the Class B ordinary shares
will include the holding period of the ADSs.
Taxation of Dividends
Distributions of
cash with respect to the Class B ordinary shares or the ADSs (including any amounts withheld in respect of Argentine taxes) generally
will, to the extent made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles,
constitute dividends for U.S. federal income tax purposes. To the extent that a distribution by us exceeds the amount of our earnings
and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. holder’s adjusted tax basis
in the Class B ordinary shares or ADSs, and thereafter as capital gain.
However, we do not
maintain calculations of our earnings and profits under U.S. federal income tax principles. U.S. holders should therefore assume
that any distribution by us with respect to Class B ordinary shares or ADSs will be reported as ordinary dividend income for U.S.
federal income tax purposes. In general, cash dividends (including any amounts withheld in respect of Argentine taxes) paid with
respect to:
|
·
|
the Class B ordinary shares generally will be includible in the gross income of a U.S. holder as
ordinary income on the day on which the dividends are received by the U.S. holder; or
|
|
·
|
the Class B ordinary shares represented by ADSs generally will be includible in the gross income
of a U.S. holder as ordinary income on the day on which the dividends are received by the Depositary;
|
and, in either case, these dividends will
not be eligible for the dividends received deduction allowed to corporations.
Dividends paid by
us generally will be taxable to a non-corporate U.S. holder at the reduced rate normally applicable to long-term capital gains,
provided that the dividends represent “qualified dividend income.” Subject to certain exceptions for short-term and
hedged positions, dividends paid on the ADSs will be treated as qualified dividend income if (i) the ADSs are readily tradable
on an established securities market in the United States and (ii) we were not in the year prior to the year in which the dividend
was paid, and are not in the year in which the dividend is paid, a PFIC. The ADSs (but not the Class B ordinary shares) should
qualify as readily tradable on an established securities market in the United States so long as they are listed on the NYSE. See
“—Passive Foreign Investment Company Considerations” below for a discussion of the PFIC rules.
In addition, the
U.S. Treasury Department has indicated that it continues to consider whether detailed information reporting guidance is necessary
pursuant to which holders of ADSs and intermediaries through whom such securities are held will be permitted to rely on certifications
from issuers to establish that dividends are treated as qualified dividend income. However, no such detailed procedures have yet
been issued and therefore we are not certain that we will be able to comply with them. You should consult your own tax advisors
regarding the availability of the preferential dividend tax rate in light of your own particular circumstances.
Dividends paid in
pesos will be includible in the gross income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate
in effect on the day they are received by the U.S. holder, in the case of Class B ordinary shares, or the Depositary, in the case
of Class B ordinary shares represented by ADSs, regardless of whether the payment is in fact converted to U.S. dollars. If dividends
paid in pesos are converted into U.S. dollars on the day they are received by the U.S. holder or the Depositary, as the case may
be, U.S. holders should not be required to recognize foreign currency gain or loss in respect of the dividend income. Generally,
any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included
in the gross income of a U.S. holder through the date such payment is converted into U.S. dollars (or otherwise disposed of) will
be treated as U.S. source ordinary income or loss. However, U.S. holders should consult their own tax advisors regarding the treatment
of any foreign currency gain or loss if any pesos received by the U.S. holder or the Depositary are not converted into U.S. dollars
on the date of receipt.
A U.S. holder generally
will be entitled, subject to a number of complex limitations and conditions, to claim a U.S. foreign tax credit in respect of any
Argentine income taxes withheld on dividends received on shares. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. For this purpose, the dividends should generally constitute “passive
category income,” or in the case of certain U.S. holders, “general category income.” U.S. holders who do not
elect to claim a credit for any foreign taxes paid during the taxable year may instead claim a deduction of such Argentine income
taxes, provided that the U.S. holder elects to deduct (rather than credit) all foreign income taxes paid or accrued for the taxable
year. Dividends received with respect to the Class B ordinary shares or ADSs will be treated as foreign source income, which may
be relevant in calculating a U.S. holder’s foreign tax credit limitation. The rules relating to computing foreign tax credits
or deducting foreign taxes are extremely complex, and U.S. holders are urged to consult their independent tax advisors regarding
the availability of foreign tax credits with respect to any Argentine income taxes withheld from a dividend on the Class B ordinary
shares or ADSs. The IRS has expressed concern that intermediaries in connection with depositary arrangements may be taking actions
that are inconsistent with the claiming of foreign tax credits by U.S. persons who are holders of ADSs. Accordingly, investors
should be aware that the discussion above regarding the availability of foreign tax credits for Argentine withholding tax on dividends
paid with respect to Class B ordinary shares represented by ADSs could be affected by future action taken by the IRS.
Sale, Exchange or Other Taxable
Disposition
In general, gain
or loss realized by a U.S. holder on the sale, exchange or other taxable disposition of Class B ordinary shares or ADSs will be
subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized
on the taxable disposition and such U.S. holder’s basis in the Class B ordinary shares or the ADSs. Such capital gain or
loss will be long-term capital gain or loss if the U.S. holder’s holding period in the Class B ordinary shares or ADSs exceeds
one year. The deductibility of capital losses is subject to limitations. Any gain or loss realized by a U.S. holder will generally
be treated as a U.S. source gain or loss for U.S. foreign tax credit purposes.
The amount realized
on a sale or other taxable disposition of Class B ordinary shares for an amount in foreign currency generally will be the U.S.
dollar value of such amount on the settlement date of such sale or other taxable disposition, in the case of a cash basis U.S.
holder, or the date of sale or taxable disposition, in the case of an accrual basis U.S. holder. On the settlement date, an accrual
basis U.S. holder generally will recognize U.S. source foreign currency gain or loss (taxable as ordinary income or loss) equal
to any difference between the U.S. dollar value of the amount received based on the exchange rates in effect on the trade date
and the settlement date. However, in the case of Class B ordinary shares traded on an established securities market, accrual basis
U.S. holders may elect to determine the U.S. dollar value of the amount realized on the sale or other taxable disposition of Class
B ordinary shares based on the exchange rate in effect on the settlement date, and no foreign currency exchange gain or loss will
be recognized at that time.
Foreign currency
received on the sale or other disposition of a Class B ordinary share will have a tax basis equal to its U.S. dollar value on the
settlement date. Any gain or loss recognized on a sale or other disposition of such foreign currency will be U.S. source ordinary
income or loss.
If Argentine withholding
tax is imposed on the sale or disposition of Class B ordinary shares or ADSs, the amount realized by a U.S. holder will include
the gross amount of the proceeds of such sale or disposition before deduction of the Argentine withholding tax. The availability
of U.S. foreign tax credits for these Argentine taxes and any Argentine taxes imposed on distributions that do not constitute dividends
for U.S. tax purposes is subject to various limitations and involves the application of rules that depend on a U.S. holder’s
particular circumstances. In particular, because any gain from the sale or other disposition of Class B ordinary shares or ADSs
generally will be treated as U.S. source income, a U.S. holder may not be able to fully utilize any U.S. foreign tax credits in
respect of such Argentine withholding taxes unless such U.S. holder has other income from foreign sources. U.S. holders are urged
to consult their own tax advisors regarding the application of the U.S. foreign tax credit rules to their investment in, and disposition
of, Class B ordinary shares or ADSs.
Passive Foreign Investment Company
Considerations
A non-U.S. corporation
will be a PFIC in any taxable year in which, after taking into account the income and assets of the corporation and certain subsidiaries
pursuant to applicable “look-through rules,” either (i) at least 75% of its gross income is “passive income”
or (ii) at least 50% of the average value of its assets is attributable to assets which produce passive income or are held for
the production of passive income. We do not believe that we were a PFIC for our most recent taxable year and do not expect to be
a PFIC for our current taxable year or in the foreseeable future. Passive income for this purpose generally includes interest,
dividends, royalties, rents and gains from commodities and securities transactions. Although interest income generally is treated
as passive income for this purpose, a special rule allows banks to treat their banking business income as non-passive. To qualify
for this rule, a bank must satisfy certain requirements regarding its licensing and activities. We believe that we currently meet,
and expect that we will continue to meet, these requirements. However, our possible status as a PFIC must be determined annually
and therefore may be subject to change, for example, if we fail to qualify under this special rule for any year.
If we were a PFIC
for any taxable year during which a U.S. holder holds Class B ordinary shares or ADSs, gain recognized by a U.S. holder on a sale
or other disposition of the Class B ordinary shares or ADSs would generally be allocated ratably over the U.S. holder’s holding
period for the Class B ordinary shares or ADSs. The amounts allocated to the taxable year of the sale or other disposition and
to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be
subject to U.S. federal income tax at the highest rate in effect in that year for individuals or corporations, as appropriate,
and an interest charge would be imposed on the resulting U.S. federal income tax liability. The same treatment would generally
apply to any distribution in respect of Class B ordinary shares or ADSs to the extent the distribution exceeds 125% of the average
of the annual distributions received by the U.S. holder on the Class B ordinary shares or ADSs during the preceding three years
or the U.S. holder’s holding period, whichever is shorter. Certain elections may be available that would result in alternative
treatments (such as mark-to-market treatment) of the Class B ordinary shares or ADSs. In addition, if we were a PFIC for a taxable
year in which we pay a dividend or in the prior taxable year, the favorable dividend rate discussed above with respect to qualified
dividend income paid to certain non-corporate U.S. holders would not apply.
Furthermore, if we
are characterized as a PFIC, a U.S. holder generally will be required to annually file an IRS Form 8621 and the statute of limitations
on assessment and collections will remain open with respect to unreported PFIC interests. In addition, if we are a PFIC for any
taxable year during which a U.S. holder holds Class B ordinary shares or ADSs and any of our non-U.S. subsidiaries is also a PFIC,
such U.S. holder will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes
of the application of the PFIC rules.
Prospective purchasers
should consult their tax advisors regarding the potential application of the PFIC rules.
Information Reporting and Backup
Withholding
Information reporting
requirements generally will apply to dividends in respect of the Class B ordinary shares or ADSs or the proceeds from the sale,
exchange or other taxable disposition of the Class B ordinary shares or ADSs paid within the United States (and, in some cases,
outside of the United States) to U.S. holders, unless, in either case, the U.S. holder is an exempt recipient (such as a corporation).
Backup withholding may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number or
certification of exempt status or fails to comply with applicable certification requirements. The amount of any backup withholding
from a payment to a U.S. holder generally will be allowed as a refund or a credit against the U.S. holder’s U.S. federal
income tax liability, provided that the required information is timely furnished to the IRS. U.S. holders should consult their
tax advisors about these rules and any other reporting obligations that may apply to the ownership or disposition of Class B ordinary
shares or ADSs, including requirements related to the holding of certain “specified foreign financial assets.”
Material Argentine Tax Considerations
Relating to Our Class B Ordinary Shares and the ADSs
The following discussion
is a summary of the material Argentine tax considerations relating to the purchase, ownership and disposition of our Class B ordinary
shares or ADSs.
Income Tax
Taxation on Dividends Paid in
Excess of Taxable Accumulated Income
At the present date
there is no Argentine income tax withholding except for the application of the “Equalization Tax” described below.
Dividends paid in
excess of taxable accumulated income at the previous fiscal period will be subject to a withholding tax (the “Equalization
Tax”) at the rate of 35% applicable on such excess and regarding both Argentine and non-Argentine resident shareholders.
Equalization Tax is applicable when dividends distributed are higher than the “net accumulated taxable income” of the
immediate previous fiscal period from when the distribution is made. In order to assess the “net accumulated taxable income”
from the income calculated by the Income Tax Law, the income tax paid in the same fiscal period should be subtracted and the local
dividends received in the previous fiscal period should be added to such income.
The Equalization
Tax will be imposed as a withholding tax on the shareholder receiving the dividend. Dividend distributions made in property (other
than cash) will be subject to the same tax rules as cash dividends. Stock dividends on fully paid shares (“
acciones liberadas
”)
are not subject to Equalization Tax.
Holders are encouraged
to consult a tax advisor as to the particular Argentine income tax consequences derived from profit distributions made on Class
B ordinary shares and ADSs.
Capital Gains Tax
Prior to September 23,
2013, gains derived by non-resident individuals or foreign companies from the sale, exchange or other disposition of ADSs or Class
B ordinary shares were exempt from income tax in Argentina. As of September 23, 2013, the results derived from the transfer
of shares, quotas and other equity interests, titles, bonds and other securities, are subject to Argentine income tax, regardless
of the type of beneficiary who realizes the gain.
Capital gains obtained
by Argentine corporate entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries,
local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina)
derived from the sale, exchange or other disposition of shares are subject to income tax at the rate of 35% on net income. Losses
arising from the sale of shares can only be offset against income derived from the same type of operations, for a five-year carryover
period.
Amendments to the
Argentine Income Tax Law by Law 26,893 now mean that income derived by Argentine resident individuals from the sale of shares and
other securities are exempt from capital gains tax, unless such securities were not traded in stock markets and/or do not have
public offering authorization in which case this income is subject to income tax at a 15% rate on net income. The amendments introduced
by implementing decree 2334/2013 state that the exemption includes income derived from the sale of shares and other securities
made through a stock exchange market duly authorized by the CNV. It is unclear whether the exemption
also
includes securities
traded through a stock exchange market duly authorized by the CNV (
i.e.
in addition to publicly offered securities), or
whether the exemption
only
includes securities made through a stock exchange market duly authorized by the CNV. Certain
qualified tax authorities publicly held the latter opinion in tax conferences.
Capital gains obtained
by non-Argentine resident individuals or non-Argentine entities from the sale, exchange or other disposition of shares would be
subject to income tax, as mentioned above the exemption for shares is not applicable to non-Argentine beneficiaries. Therefore,
the gain derived from the disposition of shares would be subject to Argentine income tax at a 15% rate on the net capital gain
or at a 13.5% rate on the gross price. The purchaser of the shares, whether Argentine resident or not, will be under an obligation
to withhold the tax due by the seller and pay it to the Argentine tax authorities, although the Argentine tax authorities have
not yet implemented any mechanism to make such withholding and payment when both seller and purchaser are non-Argentine residents.
The source of income
derived from the sale of ADSs, distribution of dividends or exchanges of shares from the ADS facility may not be uniform under
the revised Argentine income tax law. The possibly varying treatment of source of income could impact both Argentine resident holders
as well as non-Argentine resident holders. In addition, should a sale of ADSs be deemed to give rise to Argentine source income,
as of the date of this prospectus supplement no regulations have been issued regarding the mechanism for paying the Argentine capital
gains tax when the sale exclusively involves non-Argentine parties. As of the date of this prospectus supplement, no administrative
or judicial rulings have clarified the ambiguity in the law.
Holders are encouraged
to consult a tax advisor as to the particular Argentine income tax consequences derived from holding and disposing of Class B ordinary
shares and ADSs.
Personal Assets Tax
Argentine entities,
like us, have to pay the personal assets tax corresponding to Argentine and foreign domiciled individuals and foreign domiciled
entities for the holding of company shares at December 31 of each year. The applicable tax rate is 0.25% and is levied on
the proportional net worth value (“
valor patrimonial proporcional
”), or the book value, of the shares arising
from the last balance sheet. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of
such paid tax from the applicable Argentine domiciled individuals and/or foreign domiciled shareholders. The Argentine company
may seek this reimbursement of personal assets tax by setting off the applicable tax against any amount due to its shareholders
or in any other way or, under certain circumstances, waive its right under Argentine law to seek reimbursement from the shareholders.
Holders are encouraged
to consult a tax advisor as to the particular Argentine personal assets tax consequences derived from the holding of Class B ordinary
shares and ADSs.
Value Added Tax
The sale, exchange
or other disposition of our Class B ordinary shares or ADSs and the distribution of dividends are exempted from the value added
tax.
Tax on Debits and Credits on
Argentine Bank Accounts
All credits to and
debits from bank accounts held at Argentine financial institutions, as well as certain cash payments, are subject to this tax,
which is assessed at a general rate of 0.6%. There are also increased rates of 1.2% and reduced rates of 0.075%. Owners of bank
accounts subject to the general 0.6% rate may consider 34% of the tax paid upon credits to such bank accounts as a tax credit.
The taxpayers that are subject to the 1.2% rate may consider 17% of all tax paid upon credits to such bank accounts as a credit.
Such amounts can be utilized as a credit for income tax or tax on presumed minimum income. Whenever financial institutions governed
by Argentine Law No. 21,526 make payments acting in their own name and behalf, the application of this tax is restricted to
certain specific transactions. Such specific transactions include, among others, dividends or profits distributions.
Tax on Minimum Presumed Income
Entities domiciled
in Argentina are subject to this tax at the rate of 1% applicable over the total value of their assets, above an aggregate amount
of Ps.200,000. Specifically, the law establishes that banks, other financial institutions and insurance companies will consider
a taxable base equal to 20% of the value of taxable assets. This tax shall be payable only to the extent the income tax determined
for any fiscal year does not equal or exceed the amount owed under the tax on minimum presumed income. In such case, only the difference
between the tax on minimum presumed income determined for such fiscal year and the income tax determined for that fiscal year shall
be paid. Any tax on minimum presumed income paid will be applied as a credit toward income tax owed in the immediately following
10 fiscal years. Please note that shares and other equity participations in entities subject to tax on minimum presumed income
are exempt from this tax.
Holders are encouraged
to consult a tax advisor as to the particular Argentine tax on minimum presumed income consequences derived from the holding of
Class B ordinary shares and ADSs.
Pursuant to Law No. 27,260,
passed by the Argentine Congress on June 29, 2016, the tax on minimum presumed income will be eliminated beginning on January 1,
2019.
Gross Turnover Tax
In addition, gross
turnover tax could be applicable on the transfer of Class B ordinary shares or ADSs and on the receipt of dividends to the extent
such activity is conducted on a regular basis within an Argentine province or within the City of Buenos Aires. However, under the
Tax Code of the City of Buenos Aires, any transaction with shares as well as the receipt of dividends are exempt from gross turnover
tax. Holders of Class B ordinary shares and ADSs are encouraged to consult a tax advisor as to the particular gross turnover tax
consequences of holding and disposing of Class B ordinary shares and ADSs in the involved jurisdictions. Different tax authorities
(i.e., City of Buenos Aires, Corrientes, Córdoba, Tucumán, Province of Buenos Aires and Salta, among others) have
established collection regimes for gross turnover tax purposes applicable to those credits verified in accounts opened at financial
entities, of any type and/or nature and including all branch offices, irrespective of territorial location. These regimes apply
to those taxpayers included in the lists provided monthly by the tax authorities of each jurisdiction. The applicable rates may
vary depending on the jurisdiction involved. Collections made under these regimes shall be considered as a payment on account of
the turnover tax. Note that certain jurisdictions have excluded the application of these regimes on certain financial transactions.
Holders shall corroborate the existence of any exclusions to these regimes in accordance with the jurisdiction involved.
Stamp Taxes
Contracts entered
into for consideration may be subject to stamp tax in certain Argentine provinces or in the City of Buenos Aires in case agreements
related to the transfer of our Class B ordinary shares or ADSs are performed or executed within such jurisdictions. In the City
of Buenos Aires, acts or instruments related to the negotiation of shares and other securities duly authorized for their public
offering by the CNV are exempt from stamp tax. Holders of Class B ordinary shares and ADSs are encouraged to consult a tax advisor
as to the particular stamp tax consequences arising in the involved jurisdictions.
Other Taxes
There are no Argentine
inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B ordinary shares or ADSs, except
for the province of Buenos Aires and Entre Ríos. In such jurisdictions, there is a tax on free transmission of assets, including
inheritance, legacies, donations, etc. Since January 2011, the tax rates have been set between 4% and 21.925% according to the
taxable base and the degree of kinship involved. Free transmission of Class B ordinary shares or ADSs could be subject to this
tax. Holders of Class B ordinary shares and ADSs are encouraged to consult a tax advisor as to the particular tax consequences
arising in the involved jurisdictions.
Court Tax
In the event that
it becomes necessary to institute enforcement proceedings in relation to our Class B ordinary shares and ADSs in the federal courts
of Argentina or the courts sitting in the City of Buenos Aires, a court tax (currently at a rate of 3.0%) will be imposed on the
amount of any claim brought before such courts. Certain court and other taxes could be imposed on the amount of any claim brought
before the courts of the relevant province.
Tax Treaties
Argentina has signed
tax treaties for the avoidance of double taxation with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France,
Germany, Italy, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the UK. New treaties with the Arabian Emirates,
Chile and Mexico have been recently signed but are still undergoing their respective ratification procedures. There is currently
no tax treaty or convention in effect between Argentina and the United States.
Deposit and Withdrawal of Class
B Ordinary Shares in Exchange for ADSs
No Argentine tax
is imposed on the deposit or withdrawal of Class B ordinary shares in exchange for ADSs.
UNDERWRITING
We and the underwriters
named below have entered into an underwriting agreement with respect to the ADSs being offered. Goldman Sachs & Co. LLC and
Merrill Lynch, Pierce, Fenner & Smith Incorporated are the underwriters for the international offering. Subject to certain
conditions, each underwriter has severally and not jointly agreed to purchase from us the number of ADSs indicated in the following
table.
Underwriter
|
|
Number of ADSs
|
Goldman Sachs & Co. LLC
|
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
Total
|
|
|
The underwriters
have committed severally and not jointly to take and pay for all of the ADSs being offered, if any are taken, other than the ADSs
covered by the option described below unless and until this option is exercised. The underwriting agreement also provides that
if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.
We have entered
into an Argentine placement agency agreement with Macro Securities S.A. (the “Argentine placement agent”), providing
for the concurrent offering of Class B ordinary shares in Argentina. Pursuant to the terms of such placement agency agreement,
the Argentine placement agent shall carry out its best efforts to offer the Class B ordinary shares in Argentina, but has not
undertaken any underwriting commitments in connection with the Argentine offering. The international offering and the Argentine
offering are conditioned on the closing of each other.
Under Argentine law,
all of our existing shareholders have preferential rights, including preemptive rights and accretion rights, to subscribe to our
capital increase resulting from the global offering. The preferential rights have not been and will not be registered under the
Securities Act and accordingly may not be offered to shareholders in the United States or to ADS holders. The preferential subscription
period will expire on or about , 2017. In order to
facilitate the international offering and the Argentine offering, certain shareholders have assigned their preferential rights
to subscribe for Class B ordinary shares with respect to the capital increase to the Argentine placement agent and, in order to
facilitate the international offering, the Argentine placement agent, at the discretion of the underwriters, will exercise these
rights to purchase Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be sold by us in the international
offering. Subject to closing conditions set forth in the underwriting agreement, the underwriters will exercise such rights in
order to acquire the Class B ordinary shares, including Class B ordinary shares represented by ADSs, to be offered in the international
offering. In addition, the underwriters will be able to acquire from us any Class B ordinary shares, including Class B ordinary
shares represented by ADSs, relating to preemptive and accretion rights that are not exercised. The underwriters will deposit purchased
Class B ordinary shares for delivery of ADSs.
The underwriters
have an option to buy up to an additional 11,100,000 Class B ordinary shares, including Class B ordinary shares represented by
ADSs, from us to cover sales by the underwriters of a greater number of ADSs than the total number set forth in the table above.
The underwriters may exercise that option for 30 days. If any Class B ordinary shares including Class B ordinary shares represented
by ADSs, are purchased pursuant to this option, the underwriters will severally purchase Class B ordinary shares or ADSs in approximately
the same proportion as set forth in the table above.
The following table
shows the per ADS and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown
assuming both no exercise and full exercise of the underwriters’ option to purchase up to 11,100,000 additional Class B ordinary
shares, including Class B ordinary shares represented by ADSs.
Paid by Us
|
|
|
|
No Exercise
|
|
Full Exercise
|
|
Per ADS
|
|
US$
|
|
US$
|
|
Total
|
|
US$
|
|
US$
|
|
In addition to the
underwriting discounts and comissions per ADS set forth above and on the cover of this prospectus supplement, the underwriters
will receive a fee from us of US$ per Class B ordinary share sold in the Argentine offering and the preferential rights offering
in Argentina.
ADSs sold by the
underwriters to the public will initially be offered at the price to the public set forth on the cover of this prospectus supplement.
Any ADSs sold by the underwriters to securities dealers may be sold at a discount of up to US$
per ADS from the price to the public set forth on the cover of this prospectus supplement. After the initial offering of the ADSs,
the underwriters may change the offering price and the other selling terms. The offering of the ADSs by the underwriters is subject
to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
We estimate that
our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately US$ .
We have agreed,
subject to certain exceptions, not to sell, offer or otherwise dispose of or transfer, directly or indirectly, any of our
capital stock (including Class B ordinary shares) or any securities convertible into or exchangeable for our capital stock,
during a period commencing on the date of this prospectus supplement and ending 90 days after execution of the underwriting
agreement for the offering without the prior approval of Goldman Sachs & Co. LLC. Our Chairman and Vice Chairman, who
collectively held, as of March 31, 2017, approximately 37.3% of our Class B ordinary shares, have agreed to similar lock-up provisions, subject to certain exceptions.
In connection with
the offering, the underwriters may purchase and sell Class B ordinary shares or the ADSs in the open market. These transactions
may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve
the sale by the underwriters of a greater number of Class B ordinary shares or the ADSs than they are required to purchase in the
offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered
short position” is a short position that is not greater than the amount of additional Class B ordinary shares or the ADSs
for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position
by either exercising their option to purchase additional Class B ordinary shares or the ADSs or purchasing Class B ordinary shares
or the ADSs in the open market. In determining the source of Class B ordinary shares or the ADSs to cover the covered short position,
the underwriters will consider, among other things, the price of Class B ordinary shares or ADSs available for purchase in the
open market as compared to the price at which they may purchase additional Class B ordinary shares or the ADSs pursuant to the
option described above. “Naked” short sales are any short sales that create a short position greater than the amount
of additional Class B ordinary shares or the ADSs for which the option described above may be exercised. The underwriters must
cover any such naked short position by purchasing Class B ordinary shares or the ADSs in the open market. A naked short position
is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of Class B ordinary
shares or the ADSs in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing
transactions consist of various bids for or purchases of Class B ordinary shares or the ADSs made by the underwriters in the open
market prior to the completion of the offering.
The underwriters
may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased Class B ordinary shares or the ADSs sold by or for the account
of such underwriter in stabilizing or short covering transactions.
Purchases to cover
a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have
the effect of preventing or retarding a decline in the market price of Class B ordinary shares or the ADSs, and together with the
imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of Class B ordinary shares or the ADSs.
As a result, the price of Class B ordinary shares or the ADSs may be higher than the price that otherwise might exist in the open
market. Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of our Class B ordinary shares or the ADSs. The underwriters are not
required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the
NYSE, in the over-the-counter market or otherwise.
In connection with
the Argentine offering, the Argentine placement agent may engage in stabilizing transactions, in accordance with the CNV Regulations
and other applicable regulations, including, to the extent applicable, Regulation M.
We may enter into
derivative transactions with third parties, or sell Class B ordinary shares or the ADSs not covered by this prospectus supplement
to third parties in privately negotiated transactions. In connection with those derivatives, the third parties may sell Class B
ordinary shares or the ADSs covered by this prospectus supplement, including in short sale transactions. If so, the third party
may use Class B ordinary shares or the ADSs pledged by us or borrowed from us or others to settle those sales or to close out any
related open borrowings of Class B ordinary shares or the ADSs, and may use Class B ordinary shares or the ADSs received from us
in settlement of those derivatives to close out any related open borrowings of Class B ordinary shares or the ADSs. The third party
in such sale transactions will be an underwriter or will be identified in a post-effective amendment.
We have agreed to
indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.
In connection with
the international offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means,
such as email.
The underwriters,
the Argentine placement agent and their respective affiliates are full service financial institutions engaged in various activities,
which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal
investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters,
the Argentine placement agent and their respective affiliates have provided, and may in the future provide, a variety of these
services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and
expenses.
In the ordinary course
of their various business activities, the underwriters, the Argentine placement agent and their respective affiliates, officers,
directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans,
commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their
customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly,
as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters,
the Argentine placement agent and their respective affiliates may also communicate independent investment recommendations, market
color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments
and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities
and instruments.
Selling Restrictions
European Economic Area
In relation to each
Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relative Member State”)
an offer to the public of our Class B ordinary shares or the ADSs may not be made in that Relevant Member State, except that an
offer to the public in that Relevant Member State of our Class B ordinary shares or the ADSs may be made at any time under the
following exemptions under the Prospectus Directive:
|
·
|
To any legal entity which is a qualified investor as defined in the Prospectus Directive;
|
|
·
|
To fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive), subject to obtaining the prior consent of the underwriters for any such offer; or
|
|
·
|
In any other circumstances falling within Article 3(2) of the Prospectus Directive;
|
provided that no such offer or our Class
B ordinary shares or the ADSs shall result in a requirement for the publication by us, any underwriter or any placement agent of
a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes
of this provision, the expression an “offer to public” in relation to our Class B ordinary shares or the ADSs in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer
and our Class B ordinary shares or the ADSs to be offered so as to enable an investor to decide to purchase our Class B ordinary
shares or the ADSs, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that
Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended), including by Directive
2010/73/EU and includes any relevant implementing measure in the Relevant Member State.
This European Economic
Area selling restriction is in addition to any other selling restrictions set out below.
United Kingdom
In the United Kingdom,
this prospectus supplement is only addressed to and directed as qualified investors who are (i) investment professionals falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order); or (ii) high
net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as “relevant persons”). Any investment or investment activity to which
this prospectus supplement relates is available only to relevant persons and will only be engaged with relevant persons. Any person
who is not a relevant person should not act or relay on this prospectus supplement or any of its contents.
Canada
Our Class B ordinary
shares or the ADSs may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant
Obligations. Any resale of our Class B ordinary shares or the ADSs must be made in accordance with an exemption form, or in a transaction
not subject to, the prospectus requirements of applicable securities laws.
Securities legislation
in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus
supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages
are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province
or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province
or territory of these rights or consult with a legal advisor.
Pursuant to section
3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Hong Kong
Our Class B ordinary
shares or the ADSs may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not
constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.
32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute
an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities
and Futures Ordinance”), or (ii) to “professional investors” as defined in the Securities and Futures Ordinance
and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus”
as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating
to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong
or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except
if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be
disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities
and Futures Ordinance and any rules made thereunder.
Singapore
This prospectus supplement
has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement and any
other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our Class B ordinary
shares or the ADSs may not be circulated or distributed, nor may our Class B ordinary shares or the ADSs be offered or sold, or
be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore
(the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant
to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified
in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision
of the SFA, in each case subject to conditions set forth in the SFA.
Where our Class B
ordinary shares or the ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation
(which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and
the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as
defined in Section 239(1) of the SFA) of that corporation shall not be transferable for six months after that corporation has acquired
our Class B ordinary shares or the ADSs under Section 275 of the SFA except: (1) to an institutional investor under Section 274
of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that
corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer,
(4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation
32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation
32”)
Where our Class B
ordinary shares or the ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where
the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and
each beneficiary of the trust is an accredited investor, the beneficiaries' rights and interest (howsoever described) in that trust
shall not be transferable for six months after that trust has acquired our Class B ordinary shares or the ADSs under Section 275
of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section
275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired
at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount
is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the
transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in
Regulation 32.
Japan
Our Class B ordinary
shares and the ADSs have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No.
25 of 1948, as amended, or the “FIEA”). Our Class B ordinary shares and the ADSs may not be offered or sold, directly
or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation
or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to
or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and
otherwise in compliance with any relevant laws and regulations of Japan.
Switzerland
Our Class B ordinary
shares and the ADSs may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”)
or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to
the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to our
Class B ordinary shares, the ADSs or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document
nor any other offering or marketing material relating to the offering, us, our Class B ordinary shares of the ADSs have been or
will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the
offer of our Class B ordinary shares and the ADSs will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA
(FINMA), and the offer of our Class B ordinary shares and the ADSs has not been and will not be authorized under the Swiss Federal
Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective
investment schemes under the CISA does not extend to acquirers of our Class B ordinary shares or the ADSs.
Dubai International Financial
Centre
This prospectus supplement
relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”).
This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of
the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying
any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify
the information set forth herein and has no responsibility for the prospectus supplement. Our Class B ordinary shares and the ADSs
to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers
of our Class B ordinary shares and the ADSs offered should conduct their own due diligence on our Class B ordinary shares and the
ADSs. If you do not understand the contents of this prospectus supplement you should consult an authorized financial advisor.
Australia
No placement document,
prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments
Commission (“ASIC”), in relation to the offering. This prospectus supplement does not constitute a prospectus, product
disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does
not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under
the Corporations Act.
Any offer in Australia
of our Class B ordinary shares or the ADSs may only be made to persons (the “Exempt Investors”) who are “sophisticated
investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the
meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of
the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations
Act.
Our Class B ordinary
shares and the ADSs applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12
months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of
the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where
the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring our
Class B ordinary shares or the ADSs must observe such Australian on-sale restrictions.
This prospectus supplement
contains general information only and does not take account of the investment objectives, financial situation or particular needs
of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment
decision, investors need to consider whether the information in this prospectus supplement is appropriate to their needs, objectives
and circumstances, and, if necessary, seek expert advice on those matters.
LEGAL MATTERS
Certain legal matters
with respect to Argentine law will be passed upon for us by our Argentine counsel, Bruchou, Fernández Madero & Lombardi.
Certain legal matters with respect to United States and New York law will be passed upon for us by Linklaters LLP.
The validity of
the ADSs will be passed on for the underwriters by Simpson Thacher & Bartlett LLP, New York, New York. The validity of the
Class B ordinary shares will be passed on for the underwriters by Salaverri, Dellatorre, Burgio & Wetzler Malbrán,
Buenos Aires, Argentina. Simpson Thacher & Bartlett LLP will rely, without investigation, upon Salaverri, Dellatorre, Burgio
& Wetzler Malbrán as to all matters governed by Argentine law.
PROSPECTUS
Banco Macro S.A.
Class B Ordinary Shares, par value Ps.
1.00 per share,
in the form of Class B Ordinary Shares
or Class B Ordinary Shares Represented by American Depositary Shares
Rights to Purchase Class B Ordinary Shares
We may from time to
time offer our Class B ordinary shares, in the form of Class B ordinary shares or Class B ordinary shares represented by
American depositary shares, which we refer to collectively as the “securities.” We will provide the specific
terms of the securities that may be offered, and the manner in which they are being offered, in one or more supplements to
this prospectus. Any supplement may also add, update or change information contained in this prospectus. You should read both
this prospectus and any prospectus supplement, together with the additional information described under the heading
“Where You Can Find More Information,” before investing in the securities. The amount and price of the securities
will be determined at the time of any offering thereof.
The American
depositary shares (“ADSs”), each representing 10 of our Class B ordinary shares, are listed on the New York Stock
Exchange under the symbol “BMA”. Our Class B ordinary shares are listed on the
Bolsas y Mercados Argentinos
S.A.
(“BYMA”) and for trading on the Mercado Abierto Electrónico S.A. (the “MAE”) under
the symbol “BMA”.
Investing in the securities
involves risks that are described in the “Risk Factors” section contained in our most recent annual report on
Form 20-F filed with the U.S. Securities and Exchange Commission (the “SEC”) and in any applicable prospectus supplement
and may be described in certain of the documents we incorporate by reference in this prospectus. See “Item 3. Key Information—D.
Risk Factors” beginning on page 7 of our Form 20-F.
Neither the SEC nor any
state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
The date of this prospectus is May 26, 2017.
TABLE OF CONTENTS
We are responsible for the
information contained in this prospectus, any accompanying prospectus supplement and the documents incorporated by reference herein
and therein. We have not authorized any person to give you any other information, and we take no responsibility for any other information
that others may give you. This document may only be used where it is legal to sell the securities. You should not assume that the
information contained in this prospectus, any accompanying prospectus supplement and the documents incorporated by reference is
accurate as of any date other than their respective dates. Our business, financial condition, results of operations and prospects
may have changed since those dates. We are not making an offer of the securities in any state where the offer is not permitted.
ABOUT THIS PROSPECTUS
This prospectus is
part of a registration statement on Form F-3 that we filed on May 26, 2017 with the SEC, using a shelf
registration process. Under this shelf registration process, we may offer and sell any combination of the securities
described in this prospectus in one or more offerings. Each time we sell securities we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or
change information contained in this prospectus.
Unless the context otherwise
requires, in this prospectus the terms the “Bank,” “we,” “us,” “our” and “the
registrant” refer to Banco Macro S.A. and its consolidated subsidiaries.
WHERE YOU CAN FIND MORE
INFORMATION
We file periodic reports
and other information with the SEC. The SEC maintains a website (http://www.sec.gov) on which our annual and other reports are
made available. You may also read and copy any document we file at the SEC’s public reference room at 100 F Street,
N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference
room. You may also read and copy these documents at the offices of the New York Stock Exchange, 11 Wall Street, New York,
New York 10005.
Upon written or oral request, we will
provide to any person, at no cost to such person, including any beneficial owner to whom a copy of this prospectus is delivered,
a copy of any or all of the information that has been incorporated by reference in this prospectus but not delivered with this
prospectus. You may make such a request by writing or telephoning us at the following address or telephone number:
Banco Macro S.A.
Sarmiento 447
City of Buenos Aires
Argentina
Tel: +54-11-5222-6730
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate
by reference” the information we file with the SEC, which means that we can disclose important information to you by referring
you to those documents, which are considered part of this prospectus. Information that we file with the SEC in the future and incorporate
by reference will automatically update and supersede the previously filed information. We incorporate by reference the document
listed below:
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Our annual report on Form 20-F for the fiscal year ended December 31, 2016 filed
with the SEC on April 24, 2017 (our “Form 20-F”).
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We also incorporate by reference
in this prospectus all subsequent annual reports filed with the SEC on Form 20-F under the U.S. Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and those of our reports furnished to the SEC on Form 6-K that we specifically
identify as being incorporated by reference in this prospectus after the date hereof and prior to the completion of an offering
of securities under this prospectus.
As you read the above documents,
this prospectus and any prospectus supplement, you may find inconsistencies in information from one document to another. If you
find inconsistencies you should rely on the statements made in the most recent document, including this prospectus and any prospectus
supplement. All information appearing in this prospectus is qualified in its entirety by the information and financial statements,
including the notes thereto, contained in the documents we have incorporated by reference.
When acquiring any securities
discussed in this prospectus, you should rely only on the information contained or incorporated by reference in this prospectus,
any prospectus supplement and any “free writing prospectus” that we authorize to be delivered to you. Neither we, nor
any underwriters or agents, have authorized anyone to provide you with different information. We are not offering the securities
in any jurisdiction in which an offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to anyone to whom it is unlawful to make an offer or solicitation.
You should not assume that the information in
this prospectus, any prospectus supplement or any document incorporated by reference is accurate or complete at any date other
than the date mentioned on the cover page of those documents.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents
incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act with respect to our possible or assumed
future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth
opportunities, the effects of future regulations and the effects of competition. The words “believe,” “may,”
“will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “forecast” and similar words are intended to identify forward-looking statements.
These forward-looking statements,
including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this
prospectus and the documents incorporated by reference herein, are necessarily estimates reflecting the best judgment of our senior
management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested
by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various
important factors. Important factors that could cause actual results to differ materially from estimates or projections contained
in the forward-looking statements include, without limitation:
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changes in general economic, business, political, legal, social or other conditions in Argentina and
worldwide;
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effects of the global financial markets and economic crisis;
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deterioration in regional business and economic conditions;
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fluctuations and declines in the exchange rate of the Argentine peso;
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changes in interest rates which may adversely affect financial margins;
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governmental intervention and regulation (including banking and tax regulations);
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adverse legal or regulatory disputes or proceedings;
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credit and other risks of lending, such as increases in defaults by borrowers and other delinquencies;
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increase in the provisions for loan losses;
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fluctuations and declines in the value of Argentine public debt;
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decrease in deposits, customer loss and revenue losses;
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competition in banking, financial services and related industries and the loss of market share;
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cost and availability of funding;
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technological changes, changes in consumer spending and saving habits, and inability to implement
new technologies;
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the integration of any acquisitions and the failure to realize expected synergies; and
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the risk factors discussed under “Item 3. Key Information—D. Risk Factors” in our
most recent annual report on Form 20-F.
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Forward-looking statements
speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements
because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking
events and circumstances discussed in this annual report might not occur and are not guarantees of future performance.
ENFORCEABILITY OF CERTAIN
CIVIL LIABILITIES
We are incorporated under
the laws of Argentina. Substantially all of our assets are located outside the United States. Our directors, officers and controlling
persons reside outside the United States. As a result, it may not be possible for investors to effect service of process within
the United States upon such persons or to force against them or against us judgments predicated upon the civil liability provisions
of the U.S. federal securities laws or the laws of such other jurisdictions.
Our Argentine counsel, Bruchou,
Fernández Madero & Lombardi, has advised us that judgments of United States courts for civil liabilities based upon
the U.S. federal securities laws may be enforced in Argentina, provided that the requirements of Article 517 of the Federal Civil
and Commercial Procedure Code of Argentina, without reconsideration of their merits (if enforcement is sought before federal courts)
are met as follows: (i) the judgment, which must be final in the jurisdiction where rendered, was issued by a court competent in
accordance with the Argentine principles regarding international jurisdiction and resulted from a personal action, or an in rem
action with respect to personal property if such was transferred to Argentine territory during or after the prosecution of the
foreign action, (ii) the defendant against whom enforcement of the judgment is sought was personally served with the summons and,
in accordance with due process of law, was given an opportunity to defend against foreign action, (iii) the judgment must be valid
in the jurisdiction where rendered and meet authenticity requirements under Argentine law, (iv) the judgment does not violate the
principles of public policy of Argentine law, and (v) the judgment is not contrary to a prior or simultaneous judgment of an Argentine
court.
Subject to compliance with
Article 517 of the Federal Civil and Commercial Procedure Code described above, a judgment against us or the persons described
above obtained outside Argentina would be enforceable in Argentina without reconsideration of the merits.
We have been further advised by our Argentine
counsel, Bruchou, Fernández Madero & Lombardi, that:
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original actions based on the U.S. federal securities laws may be brought in Argentine courts and
that, subject to applicable law, Argentine courts may enforce liabilities in such actions against us, our directors, our executive
officers and the advisors named in this offering circular; and
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the ability of a judgment creditor or the other persons named above to satisfy a judgment by attaching
certain assets of ours is limited by provisions of Argentine law.
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A plaintiff (whether Argentine
or non-Argentine) residing outside Argentina during the course of litigation in Argentina must provide a bond to guarantee court
costs and legal fees if the plaintiff owns no real property in Argentina that could secure such payment. The bond must have a value
sufficient to satisfy the payment of court fees and defendant’s attorney fees, as determined by the Argentine judge. This
requirement does not apply to the enforcement of foreign judgments.
BANCO MACRO
S.A.
We are one of the leading
banks in Argentina. With the most extensive private-sector branch network in the country, we provide standard banking products
and services to a nationwide customer base. We distinguish ourselves from our competitors by our strong financial position and
by our focus on low- and middle-income individuals and small- and medium-sized businesses, generally located outside of the City
of Buenos Aires. We believe this strategy offers significant opportunity for continued growth in our banking business.
In general, given the relatively
low level of banking intermediation in Argentina, there are limited products and services being offered. We are focusing on the
overall growth of our loan portfolio by expanding our customer base and encouraging them to make use of our lending products. We
have a holistic approach to our banking business; we do not manage the Bank by segments or divisions or by customer categories,
by products and services, by regions, or by any other segmentation for the purpose of allocating resources and assessing profitability.
We offer savings and checking accounts, credit and debit cards, consumer finance loans and other credit-related products and transactional
services available to our individual customers and small- and medium-sized businesses through our branch network. We also offer
Plan Sueldo
payroll services, lending, corporate credit cards, mortgage finance, transaction processing and foreign exchange
services. In addition, our
Plan Sueldo
payroll processing services for private companies and the public sector give us a
large and stable customer deposit base.
REASONS FOR THE OFFERING
AND USE OF PROCEEDS
Except as may be described
otherwise in a prospectus supplement, we will use the net proceeds from our sale of the securities under this prospectus for general
corporate purposes.
We may designate a specific
allocation of the net proceeds of an offering of securities by us to a specific purpose, if any, at the time of the offering and
will describe any allocation in the related prospectus supplement.
PROSPECTUS SUPPLEMENT
This prospectus provides
you with a general description of the securities that may be offered. With respect to a particular offering of the securities registered
hereby, to the extent required, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration
statement of which this prospectus is a part will be prepared. You should read both this prospectus and any prospectus supplement
and the documents incorporated by reference in this prospectus and any prospectus supplement, together with additional information
described under the heading “Where You Can Find More Information” carefully before investing in the securities. The
prospectus supplement to be attached to the front of this prospectus will describe the terms of the offering, including the amount
and more detailed items of the securities, the initial public offering price, the price paid for the securities, net proceeds,
the expenses of the offering, the terms of offers and sales outside of the United States, if any our capitalization, the nature
of the plan of distribution, the terms of any rights offering, including the subscription price for ordinary shares, record date,
ex-rights date and exercise period, the other specific terms related to the offering, and any U.S federal income tax considerations
and Argentine tax considerations applicable to the securities. Any information in a prospectus supplement, if any, or information
incorporated by reference after the date of this prospectus is considered part of this prospectus and may add, update or change
information contained in this prospectus. Any information in such subsequent filings that is inconsistent with this prospectus
will supersede the information in this prospectus.
We have not authorized anyone
to provide any information other than that contained or incorporated by reference in this prospectus. We take no responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. We have not authorized
any other person to provide you with different information. We are not making an offer to sell the securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only
as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may
have changed since that date.
Banco Macro S.A. is a stock
corporation organized under the laws of the Republic of Argentina. We maintain our financial books and records and publish our
financial statements in Argentine pesos.
DESCRIPTION OF SHARE
CAPITAL
For a description of our
share capital, including the rights and obligations attached thereto, please refer to “Item 10. Additional Information—B.
Memorandum and Articles of Association” in our Form 20-F, incorporated by reference herein.
DESCRIPTION
OF American Depositary shares
For a description of
the ADSs, including the rights and obligations attached thereto, please refer to “Item 12. Description of
Securities Other than Equity Securities—D. American Depositary Shares” of our Form 20-F, incorporated by
reference herein, as well as to the registration statement on Form F-6 (Registration No. 333-130904) including the Deposit
Agreement pursuant to which the ADSs will be issued, which is filed as an exhibit thereto.
DESCRIPTION
OF RIGHTS TO PURCHASE
Class
B ORDINARY SHARES
We may issue subscription
rights to purchase our Class B ordinary shares. We may issue these rights independently or together with any other offered security.
The rights may or may not be transferable in the hands of their holders.
The applicable prospectus
supplement will describe the specific terms of any subscription rights offering, including:
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the title of the subscription rights;
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the securities for which the subscription rights are exercisable;
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the number of subscription rights issued;
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the extent to which the subscription rights are transferable;
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if applicable, a discussion of the material U.S. federal or other income tax considerations applicable
to the issuance or exercise of the subscription rights;
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any other terms of the subscription rights, including terms, procedures and limitations relating to
the exchange and exercise of the subscription rights;
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if applicable, the record date to determine who is entitled to the subscription rights and the ex-rights
date;
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the date on which the rights to exercise the subscription rights will commence, and the date on which
the rights will expire;
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the extent to which the offering includes an over-subscription privilege with respect to unsubscribed
securities; and
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if applicable, the material terms of any standby underwriting arrangement we enter into in connection
with the offering.
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Each subscription right
will entitle its holder to purchase for cash a number of our Class B ordinary shares, ADSs or any combination thereof at an exercise
price described in the applicable prospectus supplement. Subscription rights may be exercised at any time up to the close of business
on the expiration date set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised
subscription rights will become void.
Upon receipt
of payment and the subscription form properly completed and executed at the subscription rights agent’s office or
another office indicated in the applicable prospectus supplement, we will, as soon as practicable, forward our Class B
ordinary shares or the ADSs purchasable with this exercise. Rights to purchase our Class B ordinary shares represented by
ADSs will be represented by certificates issued by the ADS depositary upon receipt of the rights to purchase Class B ordinary
shares registered hereby. The applicable prospectus supplement may offer more details on how to exercise the
subscription rights.
We may determine to offer
subscription rights to our shareholders only or additionally to persons other than shareholders as described in the applicable
prospectus supplement. In the event subscription rights are offered to our shareholders only and their rights remain unexercised,
we may determine to offer the unsubscribed securities to persons other than shareholders . In addition, we may enter into a standby
underwriting arrangement with one or more underwriters under which the underwriter(s) will purchase any securities remaining unsubscribed
for after the offering, as described in the applicable prospectus supplement.
PLAN OF DISTRIBUTION
The securities may be sold,
and the underwriters may resell the securities, directly or through agents in one or more transactions, including negotiated transactions,
at a fixed public offering price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. The securities may be sold in portions outside the United States at
an offering price and on terms specified in the applicable prospectus supplement relating to a particular issue of the securities.
Without limiting the generality of the foregoing, any one or more of the following methods may be used when selling the securities:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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an exchange distribution in accordance with the rules of the applicable exchange;
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privately negotiated transactions;
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settlement of short sales entered into after the date of this prospectus;
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sales in which broker-dealers agree with us or a selling securityholder to sell a specified number
of securities at a stipulated price per security;
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through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise;
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by pledge to secure debts or other obligations;
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by an underwritten public offering;
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by an underwritten offering of debt instruments convertible into or exchangeable for our Class B ordinary
shares on terms to be described in the applicable prospectus supplement;
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in a combination of any of the above; or
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any other method permitted pursuant to applicable law.
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In addition, the securities
may be sold by way of exercise of rights granted pro rata to our existing shareholders.
The securities may also
be sold short and securities covered by this prospectus may be delivered to close out such short positions, or the securities may
be loaned or pledged to broker-dealers that in turn may sell them. Options, swaps, derivatives or other transactions may be entered
into with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution
of the securities and Class B ordinary shares, respectively, which securities such broker-dealer or other financial institution
may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
Any underwriters or agents
will be identified and their compensation described in the applicable prospectus supplement.
In connection with the sale
of securities, the underwriters or agents may receive compensation from us, a selling securityholder or from purchasers of the
securities for whom they may act as agents. The underwriters may sell securities to or through dealers, who may also receive compensation
from the underwriters or from purchasers of the securities for whom they may act as agents. Compensation may be in the form of
discounts, concessions or commissions. Underwriters, dealers and agents that participate in the distribution of the securities
may be deemed to be underwriters as defined in the Securities Act, and any discounts or commissions received by them from
us or a selling securityholder and any profit on the resale of the securities by them may be treated as underwriting discounts
and commissions under the Securities Act.
We or a selling securityholder
may enter into agreements that will entitle the underwriters, dealers and agents to indemnification by us or a selling securityholder
against and contribution toward certain liabilities, including liabilities under the Securities Act.
Certain underwriters, dealers
and agents and their associates may be customers of, engage in transactions with or perform commercial banking, investment banking,
advisory or other services for a selling securityholder or us, including our subsidiaries, in the ordinary course of their business.
If so indicated in the applicable
prospectus supplement relating to a particular issue of securities, the underwriters, dealers or agents will be authorized to solicit
offers by certain institutions to purchase the securities under delayed delivery contracts providing for payment and delivery at
a future date. These contracts will be subject only to those conditions set forth in the applicable prospectus supplement, and
the prospectus supplement will set forth the commission payable for solicitation of these contracts.
We will advise any selling
securityholder that while it is engaged in a distribution of the securities, it is required to comply with Regulation M promulgated
under the Exchange Act (“Regulation M”). With limited exceptions, Regulation M precludes a selling securityholder,
any affiliated purchasers and any broker-dealer or other person who participates in the distribution from bidding for or purchasing,
or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire
distribution is complete. All of the foregoing might affect the marketability of the securities.
LEGAL MATTERS
Certain legal matters with
respect to Argentine law will be passed upon for us by our Argentine counsel, Bruchou, Fernández Madero & Lombardi.
Certain legal matters with respect to United States and New York law will be passed upon for us by Linklaters LLP.
EXPERTS
The
consolidated financial statements of Banco Macro S.A. appearing in our annual report on Form 20-F for the fiscal year
ended December 31, 2016 have been audited by Pistrelli, Henry Martin y Asociados S.R.L., member of Ernst & Young Global,
independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated
herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
74,000,000
Class B Ordinary
Shares, including Class B Ordinary
Shares represented by American
Depositary Shares
Prospectus
Supplement
Global
Coordinator and Bookrunner
Goldman
Sachs & Co. LLC
Joint
Bookrunner
BofA Merrill Lynch
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