Banco de Galicia y Buenos Aires S.A. starts restructuring process with exchange offer

Banco de Galicia y Buenos Aires S.A. (?Banco de Galicia?) announced on November 25, 2003, it entered into a non-binding agreement in principle (the ?Agreement in Principle?) with the members of an ad hoc steering committee representing the Bank?s principal Bank creditors setting forth the principal terms of its proposed Bank debt restructuring process (?Bank Debt Restructuring?).

Banco de Galicia has subsequently launched on December 23, 2003 an exchange offer for its financial debt, as the initial step in a restructuring process that will encompass more than US$1,400,000,000 of debt held by banks and local and international bondholders.

On May 3, 2002 Grupo Financiero Galicia S.A. (Grupo Financiero?) announced that the Argentine Central Bank had approved the Capitalization and Liquidity Plan filed Banco de Galicia.

On June 13, 2002, Grupo Financiero announced that Banco de Galicia had initiated a foreign debt restructuring process under the context of its Capitalization and Liquidity Plan, which intends to restructure the outstanding financial indebtedness and the ongoing debt service obligations by making available to creditors an initial exchange of existing financial indebtedness for a new long term facility followed by alternative subsequent exchanges.

The exchange offer to holders of its 9% Notes due 2003 and Step Up Floating Rate Notes due 2002 (together, the ?Existing Notes?) to exchange their Existing Notes for units, in a par for par exchange offer and, in an optional second step to the exchange, to receive cash, Bonos del Gobierno Nacional due August 3, 2012 issued by the Republic of Argentina, or new securities, in each case, subject to proration. The exchange offer is essentially a two-step par-for-par exchange, with accrued interest, offering longer-term notes with reduced interest rates. The terms offered to bank creditors (US$1,036 million with accrued interest) and bondholders (US$453 million with accrued interest) are materially the same, with the exception of a subset of trade finance creditors (US$100 million) who have been offered a new money option comprised of shorter-term instruments.

In the first step, creditors are offered a combination of 10-year senior step-up amortizing notes (75%) and 15-year subordinated capitalizing notes (25%). Accrued interest is paid in cash at the original contractual rate up to April 30, 2002; thereafter it is capitalized into the new notes at a rate of 4.75% per annum.

Investors that agree to participate in the first step of the exchange are then entitled to choose between a number of second step options, available on a pro-rata basis. These include: 1) a combination of a six year amortizing FRN and an equity tranch (or a cash equivalent); 2) a swap into the senior notes due 2014; 3) a cash option at 50%; and 4) a Bonos del Gobierno Nacional (a series of unsecured securities issued by the Argentine government - BODEN), due August 3, 2012 option, offered at a discount to the face value of the original claim.

The Bank is also requesting authorizations to file an Acuerdo Preventivo Extrajudicial (an ?APE?) that will allow it to petition an Argentine bankruptcy court to approve the APE, which if approved would compel holders of Existing Notes and the Bank?s bank, multilateral agency and trade finance creditors (the ?Bank Creditors?) that did not participate in the offer and the concurrent bank debt restructuring to receive similar instruments in exchange for their indebtedness. The offer and APE solicitation are made as part of a comprehensive restructuring of the Bank´s debt and debt to the Argentine Central Bank.

Prior to, or simultaneously with, the expiration of the offer, the Bank expects to execute binding agreements with its Bank creditors to implement the Bank Debt Restructuring. The Bank expects the Bank Debt Restructuring will be on economic terms substantially similar to those of the offer (contingent upon successful settlement of the Offer) and the consideration delivered to holders of the Bank?s debt (other than certain trade finance creditors, which may receive consideration as described in the Pricing Supplement) that participate in the Bank Debt Restructuring will be comprised of either the cash and securities available in the Offer or similar instruments.

Mayer Brown, Rowe & Maw is acting as U.S. legal advisor to the Steering Committee by a team lead by partners Douglas A. Doetsch and Marc Klyman, associate Gianluca Bacchiocchi and foreign associate Rodrigo Alegría.

Marval, O?Farrell & Mairal is providing Argentine legal advise to the Steering Committee by a team lead by partners Roberto E. Silva Jr. and Luciano Ojea Quintana, and associates Fernando Giorello and Alejandro Vogelman.

Deloitte & Touche Corporate Finance S.A. is giving financial advice to the Steering Committee.

White & Case is acting as U.S. legal advisor to Banco de Galicia and Grupo Financierothrough partner Priscilla Almodovar and associate Tomer Pinkusiewicz.

Banco Galicia and Grupo Financiero are being advised by Estudio Beccar Varela through a team lead by partner Guillermo Ucha and associates Pablo Goldenberg, Alejandro Ciero and Luciana Denegri and by Rafael Manóvil of M&M Bomchil.

Banco de Galicia is also being advised by its general counsel E. Mariano Garda Olaciregui and María Helena Casasnovas.

Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz, acted as local advisor of Citigroup (dealer manager and solicitation agent) through partner Diego Serrano Redonnet who was assisted by Florencia Celasco and Diego García de la Torre. Cleary, Gottlieb, Steen & Hamilton a advised Citigroup in US law through partner Andrés de la Cruz and associates Sandra Galvis, Erik Hildenbrand y David Parish.