Circular LISOL 1-170: Minimum Capital of Financial Entities. First-Grade Mortgage and Real Estate in Financial Leasing

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
__________________________________________________________________ COMUNICACION " A " 2632 05/12/97 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 170.
Minimum capital of financial entities. First-grade mortgage and real estate in financial leasing

We address you to inform you that this Institution has adopted the following resolution:

1. Add, with effect from 1.1.98, point 3.1.1.7. e) to the table for weighting the risk values of non-fixed assets referred to in Annex I to Communication "A" 2136 (text according to Communication "A" 2541):

• 3.1.1.7. mortgage
  "e) first-grade on real estate for own home that are subject to the encumbrance, for financing granted from 1.1.98 that meet the other conditions mentioned in point 3.1.1.7. a), and according to the result of the comparison between the values of the index of "Evolution of the price of the square meter in sales operations (average country)" which, monthly, is prepared by the Mortgage Bank and whose series will be published by the Central Bank, corresponding to the third month prior to that in which the financing is granted and to the base month -October 1997= 100-, according to the following scale:

1. up to 1.50 50

2. more than 1.50 and up to 2 100

3. more than 2 200"

4. Replace, with effect from 1.1.98, points 3.1.1.7. a), 3.1.1.7. b) and 5.1. of the table for weighting the risk values of non-fixed assets referred to in Annex I to Communication "A" 2136 (text according to Communication "A" 2541), with the following:

• 3.1.1.7. mortgage
  "a) first-grade on real estate for own home that are subject to the encumbrance, when it concerns loans granted until 31.12.97, for their acquisition or improvement or cancellation of pre-existing loans agreed with that destination, regarding the credit support that does not exceed 75% of the appraisal value of such goods 50" "b) linked to real estate referred to in point 3.1.1.7., on the amount that exceeds 75% of the appraisal value of such goods and according to whether they are included in the sections:
• a), e) 1. and e) 2. 100
• e) 3. 200"
• 5.1. real estate in financial leasing (real estate for tenant's housing)

"5.1.1. applicable on 75% of the value of the goods, for financing granted from 1.1.98, and according to the result of the comparison between the values of the index of "Evolution of the price of the square meter in sales operations (average country)" which, monthly, is prepared by the Mortgage Bank and whose series will be published by the Central Bank, corresponding to the third month prior to that in which the financing is granted and to the base month -October 1997= 100-, according to the following scale:
5.1.1.1. up to 1.50 50
5.1.1.2. more than 1.50 and up to 2 100
5.1.1.3. more than 2 200"
"5.1.2. applicable on 75% of the value of the goods subject to financing granted until 31.12.97 50" "5.1.3. on the rest of the financing, according to whether they are included in the sections:

• 5.1.1.1., 5.1.1.2. and 5.1.2. 100
• 5.1.1.3. 200"

3. Add as a criterion for the application of risk weights, the following:

"l) The weight that must be applied for each operation according to the scales contained in points 3.1.1.7. e) and 5.1.1. will not be modified by subsequent variations of the usable index."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Alfredo A. Besio
Submanager of Standards for Financial Entities Manager of Standards for Financial Entities