SecProbe.io

CORRESP
1
filename1.htm

    November
      20, 2007

              Re:

              BBVA
                Banco Francés S.A.

    Form
      20-F for the fiscal year ended December 31, 2006

    Filed
      May 16, 2007

    File
      No. 001-12568

    VIA
      EDGAR
      SUBMISSION AND FEDERAL EXPRESS

    Mr.
      Edwin
      Adames

    United
      States Securities and Exchange Commission

    Division
      of Corporation Finance

    100
      F
      Street N.E.

    Washington,
      D.C. 20549-3561

    Dear
      Mr.
      Adames:

    Thank
      you
      for your letter dated September 24, 2007, setting forth comments from staff
      of
      the Division of Corporation Finance (the “Staff”) of the United States
      Securities and Exchange Commission (the “Commission”) on the annual report on
      Form 20-F for the year ended December 31, 2006 (the “2006 Form 20-F”) of BBVA
      Banco Francés S.A. (“Banco Francés”, also referred to in this letter as the
“company”, the “Bank” or “we”), which was filed with the Commission on May
      16, 2007.

    We
      appreciate your understanding in allowing us the time necessary to prepare
      our
      responses, which we set forth in Annex A hereto. To facilitate the Staff’s
      review, we have reproduced the captions and numbered comments from the Staff’s
      comment letter in boldface text.

    In
      providing these responses, and in response to the Staff’s request, we hereby
      acknowledge that:

              §

              BBVA
                Banco Francés S.A. is responsible for the adequacy and accuracy of the
                disclosure in its filings;

              §

              Staff
                comments or changes to disclosure in response to Staff comments in
                the
                filings reviewed by the Staff do not foreclose the Commission from
                taking
                any action with respect to the filing;
                and

              §

              BBVA
                Banco Francés S.A. may not assert Staff comments as a defense in any
                proceeding initiated by the Commission or any person under the federal
                securities laws of the United
                States.

    We
      would
      like to express our appreciation for your attention in these matters, and we
      are
      available to discuss any of our responses with you at your convenience. In
      that
      regard, please do not hesitate to contact Martín Ezequiel Zarich in Buenos Aires
      at 011-54-4341-5083 or fax: 011-54-4341-5085; or our counsel, Michael J.
      Willisch of Davis Polk & Wardwell, at 011-34-91-702-2741 or fax:
      011-44-207-710-4884.

                Very
                  truly yours,

              /s/
                Martín Ezequiel Zarich

              Martín
                Ezequiel Zarich

              BBVA
                Banco Francés S.A.

      Annex
        A

    Note
      17.1. Income Taxes, page F-51

              1.

              We
                refer to the Deferred Taxes line item in the Argentine Banking
                GAAP to US GAAP reconciliation in Note 17.24 on page F-65 for reductions
                to US GAAP Net Income of 360.391 million pesos in 2006; 347.458 million
                pesos in 2005 and (4.526) million pesos in 2004, equal to 37%; 21%
                and
                0.5% of US GAAP net income for each year, respectively. Please tell
                us and
                explain in future filings in the summary table on page F-51 of Note
                17.1:

              ·

              The
                nature and amount of the Initial adjustments to net deferred tax
                assets of
                104.431 million pesos in 2006; 77.258 million pesos in 2005 and (218.641)
                million pesos in 2004 which account for 29%, 22% and 483%, respectively
                of
                the adjustment for deferred taxes for each year
                respectively.

    The
      Initial adjustment to net deferred tax assets corresponds to amendments made
      to
      the tax returns submitted to the National Administration of Federal Revenues
      (AFIP Administración Federal de Ingresos Públicos de Argentina) in respect of
      Income Tax. Such amendments are made in order to adjust to regulations issued
      by
      the controlling body concerning tax aspects deriving from the effects of the
      financial crisis sustained by the country since the end of the 2001 fiscal
      year
      or to regulatory interpretations made by the aforementioned body and not
      contemplated in the tax regulations in force at the date of submission of the
      preceding tax returns.

    The
      Bank
      has considered that in terms of paragraph 27 and 45.g. of SFAS 109, “Accounting
      for Income Taxes”, these adjustments correspond to changes in the tax
      legislation occurred in the fiscal year where the Initial adjustment to net
      deferred tax assets is disclosed. These adjustments affect the initial balances
      of net operating losses considered in determining income tax under local
      accounting standards, and are disclosed under Initial adjustments to net
      deferred tax assets in order to segregate these concepts from those included
      under Other, net, of the table shown in the said note.

    Such
      initial adjustments originate a decrease in the initial net operating losses
      and
      in the net deferred tax assets amounting to 104.431 million pesos in the 2006
      fiscal year, 77.258 million pesos in 2005 and (218.651) million pesos in
      2004.

    In
      the
      2006 fiscal year these changes in the tax legislation affects the initial net
      operating losses as follows:

                Description

                2006(1)

              Deductible
                legal actions over deposits

              345.636

              Guaranteed
                loans

            (175.151
            )

              Others

            (66.054
            )

              Initial
                adjustments to net deferred tax assets

                104.431

            _______________

            (1)
              In millions of Ps.

    For
      the
      purpose of clarifying the disclosures in our Annual Report on Form 20-F for
      the
      fiscal year ending on December 31, 2007 (the “2007 Form 20-F”) and in other
      future financial statement filings made with the SEC that contain U.S. GAAP
      reconciliations (the 2007 Form 20-F, together with such other filings,
      collectively, the “Future Filings”), we propose to the Staff consideration of
      the following changes (we have underlined the wording that we have added and
      struck through irrelevant information) to the table included in page F-51 in
      order to clarify this line item, as follows:

        -
          1
          -

        Annex
          A
          (cont.)

              Description

                2006
                  (1)

              Income
                before income tax in accordance with US GAAP

              1,468,544

              Statutory
                income tax rate

            35.00
            %

              Income
                tax provision computed at statutory rate

              513,990

              Tax
                exempt income

            (14,257
            )

              Non-deductible
                items

              —

              Other,
                net

              (11,391

              (116,342

              )

              )

              Income
                tax computed in accordance with U.S. GAAP

                487,822

                383,391

            Initial
              adjustments to net deferred tax assets

            (104,431
            )

              Income
                tax computed in accordance with BCRA’s rules (2)

                23,000

              Adjustments
                to reconcile income tax (benefit) to U.S. GAAP

            360,391

            (Recover)
              of allowances on deferred tax assets

            (325,939
            )

            _______________

              (1)
                In thousands of Ps.

              (2)  BCRA:
                Banco Central de la República Argentina, the Argentine financial system
                regulator.

    We
      will
      also modify in future filings the paragraph related to the line item “Other,
      net”, as follows:

    “Other,
      net” includes other net effects, and tax exempt income and non-deductible
      items arising from Consolidated Subsidiaries, and initial adjustments to the
      net deferred tax assets originated in changes that occurred in the tax
      legislation for the fiscal year ended December 31, 2006.

              ·

              How
                these initial adjustments are treated under SFAS 109 for purposes
                of
                determining the deferred tax valuation allowance under US
                GAAP.

    As
      mentioned in the preceding comment, the initial adjustment affects the deferred
      tax assets originated in net operating losses.

    Under
      US
      GAAP, the net operating losses that are part of the net deferred tax assets
      are
      entirely provisioned in the years 2004 through 2005. As the initial adjustment
      affects net operating losses that are entirely provisioned, its impact in equity
      as well as in the income/loss is neutral.

              2.

              We
                refer to the Allowances on deferred tax assets line item in the
                Argentine Banking GAAP to US GAAP reconciliation in Note 17.24 on
                page
                F-65 which increases US GAAP Net Income through a recovery of the
                valuation allowances for 325.939 million pesos in 2006; 366.801 million
                pesos in 2005 and 509.158 million pesos in 2004, equal to 33%, 22%
                and 36%
                of US GAAP net income for each year, respectively. Please tell us
                and in
                future filings revise the summary table on page F-51 of Note 17.1
                to
                provide the following
                information:

              ·

              State
                the amount of Income before income tax in accordance with US GAAP
                for 2006, 2005 and 2004 that was used to determine the Income tax
                (benefit) provision computed at statutory rate in accordance with US
                GAAP for each of the three fiscal
                years.

    The
      amounts requested are incorporated in the summary table of Note 17.25. The
      Income before income tax in accordance with US GAAP amounted to 1,468,544
      thousands pesos in 2006; 1,780,936 thousands pesos in 2005 and 1,470,092
      thousands pesos in 2004.

    We
      acknowledge your comment and in future filings, as mentioned in our comment
      to
      the first bullet of point 1, we will modify the table included in page F-51
      in
      order to clarify this line item, as follows:

              Description

                2006
                  (1)

              Income
                before income tax in accordance with US GAAP

              1,468,544

              Statutory
                income tax rate

            35.00
            %

              Income
                tax provision computed at statutory rate

              513,990

            _______________

              (1)  In
                thousands of Ps.

          -
            2
            -

      Annex
        A
        (cont.)

              ·

              Reconcile
                the amount of Income tax computed in accordance with BCRA rules
                in the summary table on page F-51 of 23.000 million pesos for
                2006;
                (242.000) million pesos for 2005 and 67.497 million pesos for 2004
                with
                the Income Tax and tax on minimum presumed income (loss) of
                71.680 million pesos for 2006; 18.712 million pesos for 2005 and
                77.099
                million pesos for 2004 in the Consolidated Statement of Operations
                prepared in accordance with Argentine Banking GAAP on page
                F-9.

    Note
      5.2.
      to the Consolidated Financial Statements indicates how tax on minimum presumed
      income (TOMPI) is determined, and Note 5.1. explains how to determine the income
      tax. The TOMPI is complementary to the income tax. The Bank’s tax obligation for
      each year will coincide with the highest of these taxes. However, if TOMPI
      exceeds income tax in a given year, the excess thereof may be computed as a
      payment on account of any income tax in excess of TOMPI that may occur in any
      of
      the following ten years.

    Since
      such
      taxes are calculated on different bases and as they are mutually complementary,
      such amounts are not liable to be reconciled.

    For
      the
      years 2006 and 2005, the amounts included on page F-9 correspond exclusively
      to
      the TOMPI. For 2004, from the amount included 9,602 thousands of pesos
      correspond to the TOMPI and 67,497 thousands of pesos to the income tax charge
      under the deferred tax method.

    In
      addition to the above, as expressed in the table included on page F-51, the
      income tax determined as per the defferred tax method amounted to 23,000
      thousands of pesos for 2006, (242,000) thousands of pesos for 2005 and 67,497
      thousands of pesos for 2004. As mentioned above, the tax determined for 2004
      is
      included in the amount indicated under Income Tax and Tax on minimun presumed
      income of the Consolidated Statement of Operations. As for the amount
      corresponding to 2006, it is included under Other Expense, and that for 2005
      is
      included under Other Income on page F-9, as per BCRA standards.

    Following
      we detail the amounts related to the Income Tax computed in accordance with
      BCRA
      rules and Tax on minimun presumed income:

                2006
                  (1)

                2005
                  (1)

                2004
                  (1)

              Tax
                on minimun presumed income

              71,680

              18,712

              9,602

              Income
                tax

              23,000

            (242,000
            )

              67,497

              Total
                – Income tax plus Tax on minimun presumed income

                94,680

            (223,288
            )

                77,099

            _______________

              (1)  In
                thousands of Ps.

                ·

              Reconcile
                the Income tax computed in accordance with US GAAP which appears
                in the summary table on page F-52 of 487.822 million pesos; 182.716
                million pesos and 281.622 million pesos for 2006, 2005 and 2004,
                respectively with the Income tax line item in the Consolidated
                Statement of Operation under US GAAP in Note 17.25 on page F-66 of
                455.071
                million pesos; 124.170 million pesos and 72.573 million pesos for
                2006,
                2005 and 2004,
                respectively.

    The
      differences between the amounts included on page F-51 and those on page F-66,
      derive from: a) the effect of the Initial adjustment mentioned in point 1 of
      your comments; b) the tax effect of the components included under Other
      comprehensive income, and c) the effect of the Tax on minimun pr