Circular No. 4004 Amending Circular No. 3,996 Regarding LTEL-LFG Financial Loan Operations

The Board of Directors of the Central Bank of Brazil, in a session held on April 15, 2020, based on Art. 10, item V, of Law No. 4,595 of December 31, 1964, and Resolution No. 4,795 of April 2, 2020,

R E S O L V E:

Art. 1º Circular No. 3,996 of April 6, 2020, shall enter into force with the following alterations:

“Art. 8º ......................................................

I - ............................................................

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r) advances on foreign exchange contracts;

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§ 4º In addition to the financial assets and securities provided for in items I, II, and III of the main text, operations carried out with related parties, as per Art. 2º of Resolution No. 4,693 of October 29, 2018, shall not be accepted, nor shall operations in the form of advances on foreign exchange contracts.

§ 5º In the request for the operation referred to in item I of Art. 13, the financial institution may request the Central Bank of Brazil that the evaluation of the eligibility of the collateral assets be conducted after the processing of Document 3040 – Credit Risk Data relative to the month prior to or current with respect to the date of the request.” (NR)

“Art. 13. .....................................................

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II - authorization for the issuance of Financial Letters, on a specific date, based on the Available Financial Limit and the parameters referred to in items I and II of the main text of Art. 14;

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“Art. 14. The sum of the value of the Financial Letters issued by financial institutions belonging to the same prudential conglomerate, as referred to in Resolution No. 4,280 of October 31, 2013, or by multiple or commercial banks belonging to a cooperative credit system, at the time of issuance, relating to ongoing loan operations, shall not exceed:

I - in the case of financial institutions belonging to the same prudential conglomerate, 100% (one hundred percent) of the amount of the Conglomerate Reference Equity, calculated in accordance with Resolution No. 4,192 of March 1, 2013;

II - in the case of multiple or commercial banks belonging to a cooperative system, 100% (one hundred percent) of the amount of Adjusted Net Equity (ANE) calculated based on the Combined Balance Sheet of the Cooperative System, as referred to in Resolution No. 4,151 of October 30, 2012.

§ 1º The ANE is obtained by the algebraic sum of the following groups comprising the Accounting Plan of the Institutions of the National Financial System (Cosif):

I - (+) 6.0.0.00.00-2 Net Equity;

II - (+) 7.0.0.00.00-9 Creditor Result Accounts;

III - (-) 8.0.0.00.00-6 Debtor Result Accounts.

§ 2º When granting the authorization referred to in the main text of Art. 13, the Board of Directors of the Central Bank of Brazil shall divide, in stages, the use of the limit referred to in items I and II of the main text of this article according to the following schedule:

I - up to 50% (fifty percent) of the amount of the Conglomerate Reference Equity or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, in operations requested until April 30, 2020;

II - up to 25% (twenty-five percent) of the amount of the Conglomerate Reference Equity or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, in operations requested from May 18 to May 28, 2020;

III - up to 25% (twenty-five percent) of the amount of the Conglomerate Reference Equity or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, in operations requested from July 20 to July 31, 2020;

IV - up to 10% (ten percent) of the amount of the Conglomerate Reference Equity, or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from August 24 to August 27, 2020;

V - up to 10% (ten percent) of the amount of the Conglomerate Reference Equity, or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from September 21 to September 24, 2020;

VI - up to 10% (ten percent) of the amount of the Conglomerate Reference Equity, or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from October 26 to October 29, 2020;

VII - up to 10% (ten percent) of the amount of the Conglomerate Reference Equity, or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from November 23 to November 26, 2020; and

VIII - up to 50% (fifty percent) of the amount of the Conglomerate Reference Equity, or the ANE calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from December 14 to December 17, 2020.” (NR)

“Art. 15. The financial institution must update the data reported to the central depository or the registering entity, at least once per month, reporting the position as of the last day of the month, by the 9th (ninth) business day of the following month.

§ 1º The update referred to in the main text must consider the occurrence of any alteration in the characteristics of the guarantees that may imply a modification in classification or in the value of the financial assets or securities.

§ 2º Alterations that may imply a modification in classification relating to debtors whose operations represent more than 5% (five percent) of the financial assets or securities collateralizing must be reported within 2 (two) business days, counted from the moment the alteration is identified.” (NR)

Art. 2º The following provisions of Circular No. 3,996 of 2020 are hereby revoked:

I - the sole paragraph of Art. 14; and

II - the sole paragraph of Art. 15.

Art. 3º This Circular enters into force on the date of its publication.

Bruno Serra Fernandes Paulo Sérgio Neves de Souza Monetary Policy Director Supervision Director

João Manoel Pinho de Mello Director of the Organization of the Financial System and Resolution