BCB Resolution No. 122, of August 2, 2021

Provides for the deposit of Financial Letters in an entity authorized by the Central Bank of Brazil and for the authorization to use funds raised through Financial Letters in the composition of Reference Equity.

The Collegiate Board of the Central Bank of Brazil, in a session held on July 27, 2021, based on arts. 9 of Law No. 4.595, of December 31, 1964, 22 of Law No. 12.810, of May 15, 2013, and 8 of Resolution No. 4.733, of June 27, 2019, and having in view the provisions of arts. 38 of Law No. 12.249, of June 11, 2010, and 17 to 22 of Resolution No. 4.192, of March 1, 2013,

RESOLVES:

Art. 1. This Resolution regulates the deposit of Financial Letters in an entity authorized by the Central Bank of Brazil to exercise the activity of centralized deposit of financial assets and the authorization to use funds raised through Financial Letters for the purpose of composing Reference Equity (PR).

Art. 2. The Financial Letter must contain, at a minimum, the following characteristics and provisions, duly informed in the constitutive registration of the title in the central depository system:

I - the denomination Financial Letter;

II - the identification of the issuing financial institution;

III - the serial number, place, and date of issuance;

IV - the nominal value;

V - the interest rate, fixed or floating, with capitalization admitted;

VI - the clause of correction by exchange rate variation, if any;

VII - the clauses that establish other forms of remuneration, including based on indices or public knowledge rates, if any;

VIII - the subordination clause, if any;

IX - the date or conditions for maturity;

X - the place of payment;

XI - the identification of the holder;

XII - the description of the real or personal guarantee, if any;

XIII - the clause of periodic payment of earnings, if any;

XIV - the clause of suspension of payment of the stipulated remuneration, if any;

XV - the clause of extinction of the credit right represented by the Financial Letter, if any;

XVI - the clause of conversion into shares of the issuing institution, if any;

XVII - the clause of maximum limit to the quantity of shares to be delivered to the investor, if the clause of item XVI is present;

XVIII - the clause of repurchase option by the issuing institution, if any; and

XIX - the dates on which the repurchase option may be exercised, if the clause of item XVIII is present.

Art. 3. The Financial Letter issued for the purpose of composing PR must additionally contain, in its constitutive registration, the clauses that evidence compliance with the requirements established by legislation and current regulation for the instrument to be eligible to compose the Capital Complementar of PR or Level II of PR, arranged in a specific field named Subordination Core, according to the content defined in Annexes 1 to 4 of this Resolution.

Sole Paragraph. The provisions of the main text apply to financial letters issued after December 1, 2019.

Art. 4. The values paid in full regarding Financial Letters with a subordination clause are authorized to compose the PR of the issuing institution, provided that the provisions of arts. 2 and 3 of this Resolution are observed.

Sole Paragraph. The authorization referred to in the main text does not apply to Financial Letters issued with a clause converting the credit right represented by them into shares eligible for the Principal Capital of the issuing institution.

Art. 5. Non-compliance with the terms of the Subordination Core results in the cancellation of the authorization mentioned in Art. 4, even if the acts or clauses causing the violation are deemed ineffective.

Art. 6. Circular No. 3,963, of September 24, 2019, is revoked.

Art. 7. This Resolution enters into force on the date of its publication.

Otávio Ribeiro Damaso João Manoel Pinho de Mello Director of Regulation Director of System Organization Financial and Resolution

ANNEX 1

Subordination Core of Financial Letter issued for the purpose of composing the Capital Complementar of Reference Equity, with provision for permanent extinction of the credit right against the issuing institution

• Any clause of this Financial Letter or of another accessory document that is inconsistent with the requirements established by legislation and current regulation for the instrument to be eligible to compose the Capital Complementar of Reference Equity (PR) and with the other clauses of this Subordination Core is considered ineffective.

• The amendment, alteration, or revocation of the provisions of this Subordination Core and the other issuance conditions of the Financial Letter depend on prior authorization from the Central Bank of Brazil.

• The payment of this Financial Letter is subordinate to the payment of other liabilities of the issuing institution, with the exception of the payment of the elements that compose the Principal Capital, in the event of dissolution of the issuing institution.

• This Financial Letter will not be subject to guarantee, insurance, or any other mechanism that obliges or permits payment or transfer of resources, directly or indirectly, from the issuing institution, an entity within the conglomerate, or a non-financial controlled entity, to its holder, in a manner that compromises the subordination condition referred to in item 3.

• Any clause of this Financial Letter or of another accessory document that, directly or indirectly, alters the originally raised value, including through agreements that obligate the issuing institution to compensate the investor if a new instrument is issued with better remuneration conditions, is considered ineffective, with the exception of repurchase and redemption cases, when provided.

• The purchase of this Financial Letter is not subject to financing, direct or indirect, by the issuing institution.

• The maturity of this Financial Letter is conditioned, exclusively, to the occurrence of the dissolution of the issuing institution or to the default of the obligation to pay the remuneration stipulated herein.

• The payment of the values related to this Financial Letter is made in cash.

• The repurchase and early redemption of this Financial Letter, even if carried out indirectly through an entity within the conglomerate or by a non-financial entity controlled by the issuing institution, are conditioned on authorization from the Central Bank of Brazil, except in the cases provided for in arts. 5, § 6, and 10, § 4, of Resolution No. 4.733, of June 27, 2019.

• Any clause of this Financial Letter or of another accessory instrument that provides for the variation of remuneration conditions after its issuance, including due to fluctuations in the credit quality of the issuing institution, is considered ineffective.

• The payment of the remuneration of this Financial Letter will occur only with resources from profits and profit reserves distributable in the last reporting period, with payments exceeding these resources suspended.

• In the event of imposition by the Central Bank of Brazil on the issuing institution of restrictions on the distribution of dividends or other results related to shares, quotas, or quota shares eligible for Principal Capital, the payment of the remuneration of this Financial Letter will be suspended in the same proportion as the imposed restriction.

• The payment of the remuneration of this Financial Letter will be suspended in the same percentages as those referred to in Art. 9, § 4, of Resolution No. 4.193, of March 1, 2013, or any that may succeed it, in the event of:

I - the issuing institution presenting insufficiency in meeting the Principal Capital Add-on; or

II - the payment resulting in non-compliance with the minimum requirements for Principal Capital, Level I, and PR.

• The remuneration of this Financial Letter not paid due to the provisions of item 11 and the remuneration for the suspension period implemented due to the provisions of items 12 and 13 are considered extinguished.

• The credit right represented by this Financial Letter will be extinguished at the value corresponding to the balance calculated in Level I of PR, in the following situations:

I - disclosure by the issuing institution, in the manner established by the Central Bank of Brazil, that its Principal Capital is at a level below 5.125% (five and one hundred twenty-five thousandths percent) of the amount of risk-weighted assets (RWA), calculated in the manner established by Resolution No. 4.193, of 2013, or any that may succeed it;

II - signing of a commitment to inject resources into the issuing institution, if the exception provided for in Art. 28 of Complementary Law No. 101, of May 4, 2000, applies, which allows the use of public resources to assist institutions of the National Financial System through specific law;

III - decree by the Central Bank of Brazil of a temporary special administration regime or intervention in the issuing institution; or

IV - determination by the Central Bank of Brazil, according to criteria established in specific regulation issued by the National Monetary Council.

• The extinction referred to in item 15 will not occur in the cases of revision or republication of documents that have been used by the issuing institution as a basis for disclosing the proportion between Principal Capital and the RWA amount, provided in item 15, I.

• The occurrence of the situations provided for in items 11 to 16 will not be considered a default event or other factor that generates the acceleration of debt maturity in any legal transaction involving the issuing institution.

• The effectiveness of items 11 to 15 is conditioned on the validity of the Central Bank of Brazil's authorization to use the funds raised through this Financial Letter for the purpose of composing PR, so that it will cease in the event of cancellation of said authorization, which may occur, among other cases arising from regulation, in case of non-compliance with the terms of this Subordination Core, even if the acts or clauses causing the violation are deemed ineffective.

ANNEX 2

Subordination Core of Financial Letter issued for the purpose of composing Level II of Reference Equity, with provision for permanent extinction of the credit right against the issuing institution

1 - Any clause of this Financial Letter or of another accessory document that is inconsistent with the requirements established by legislation and current regulation for the instrument to be eligible to compose Level II of Reference Equity (PR) and with the other clauses of this Subordination Core is considered ineffective.

2 - The amendment, alteration, or revocation of the terms of this Subordination Core and the other issuance conditions of the Financial Letter depend on prior authorization from the Central Bank of Brazil.

3 - The payment of this Financial Letter is subordinate to the payment of other liabilities of the issuing institution, with the exception of the payment of the elements that compose the Principal Capital and Capital Complementar, in the event of dissolution of the issuing institution.

4 - This Financial Letter will not be subject to guarantee, insurance, or any other mechanism that obliges or permits payment or transfer of resources, directly or indirectly, from the issuing institution, an entity within the conglomerate, or a non-financial controlled entity, to its holder, in a manner that compromises the subordination condition referred to in item 3.

• The purchase of this Financial Letter is not subject to financing, direct or indirect, by the issuing institution.

• The payment of the values related to this Financial Letter is made in cash.

• The repurchase and early redemption of this Financial Letter, even if carried out indirectly through an entity within the conglomerate or by a non-financial entity controlled by the issuing institution, are conditioned on authorization from the Central Bank of Brazil, except in the cases provided for in arts. 5, § 6, and 10, § 4, of Resolution No. 4.733, of June 27, 2019.

8 - Any clause of this Financial Letter or of another accessory instrument that provides for the variation of terms or remuneration conditions after its issuance, including due to fluctuations in the credit quality of the issuing institution, is considered ineffective.

9 - The credit right represented by this Financial Letter will be extinguished, at the value corresponding to the balance calculated in Level II of PR, in the following situations:

I - disclosure by the issuing institution, in the manner established by the Central Bank of Brazil, that its Principal Capital is at a level below 4.5% (four and five tenths percent) of the amount of risk-weighted assets (RWA), calculated in the manner established by Resolution No. 4.193, of March 1, 2013, or any that may succeed it;

II - signing of a commitment to inject resources into the issuing institution, if the exception provided for in Art. 28 of Complementary Law No. 101, of May 4, 2000, applies, which allows the use of public resources to assist institutions of the National Financial System through specific law;

III - decree by the Central Bank of Brazil of a temporary special administration regime or intervention in the issuing institution; or

IV - determination by the Central Bank of Brazil, according to criteria established in specific regulation issued by the National Monetary Council.

10 - The extinction referred to in item 9 will not occur in the cases of revision or republication of documents that have been used by the issuing institution as a basis for disclosing the proportion between Principal Capital and the RWA amount, provided in item 9, I.

11 - The occurrence of the situations provided for in items 9 and 10 will not be considered a default event or other factor that generates the acceleration of debt maturity in any legal transaction involving the issuing institution.

12 - The effectiveness of item 9 is conditioned on the validity of the Central Bank of Brazil's authorization to use the funds raised through this Financial Letter for the purpose of composing PR, so that it will cease in the event of cancellation of said authorization, which may occur, among other cases arising from regulation, in case of non-compliance with the terms of this Subordination Core, even if the acts or clauses causing the violation are deemed ineffective.

ANNEX 3

Subordination Core of Financial Letter issued for the purpose of composing the Capital Complementar of Reference Equity, with provision for conversion of the credit right into shares eligible for the Principal Capital of the issuing institution

1 - Any clause of this Financial Letter or of another accessory document that is inconsistent with the requirements established by legislation and current regulation for the instrument to be eligible to compose the Capital Complementar of Reference Equity (PR) and with the other clauses of this Subordination Core is considered ineffective.

2 - The amendment, alteration, or revocation of the provisions of this Subordination Core and the other issuance conditions of the Financial Letter depend on prior authorization from the Central Bank of Brazil.

3 - The payment of this Financial Letter is subordinate to the payment of other liabilities of the issuing institution, with the exception of the payment of the elements that compose the Principal Capital, in the event of dissolution of the issuing institution.

4 - This Financial Letter will not be subject to guarantee, insurance, or any other mechanism that obliges or permits payment or transfer of resources, directly or indirectly, from the issuing institution, an entity within the conglomerate, or a non-financial controlled entity, to its holder, in a manner that compromises the subordination condition referred to in item 3.

5 - Any clause of this Financial Letter or of another accessory document that, directly or indirectly, alters the originally raised value, including through agreements that obligate the issuing institution to compensate the investor if a new instrument is issued with better remuneration conditions, is considered ineffective, with the exception of repurchase and redemption cases, when provided.

6 - The purchase of this Financial Letter is not subject to financing, direct or indirect, by the issuing institution.

7 - The maturity of this Financial Letter is conditioned, exclusively, to the occurrence of the dissolution of the issuing institution or to the default of the obligation to pay the remuneration stipulated herein.

8 - The payment of the values related to this Financial Letter is made in cash.

9 - The repurchase and early redemption of this Financial Letter, even if carried out indirectly through an entity within the conglomerate or by a non-financial entity controlled by the issuing institution, are conditioned on authorization from the Central Bank of Brazil, except in the cases provided for in arts. 5, § 6, and 10, § 4, of Resolution No. 4.733, of June 27, 2019.

10 - Any clause of this Financial Letter or of another accessory instrument that provides for the variation of remuneration conditions after its issuance, including due to fluctuations in the credit quality of the issuing institution, is considered ineffective.

11 - The payment of the remuneration of this Financial Letter will occur only with resources from profits and profit reserves distributable in the last reporting period, with payments exceeding these resources suspended.

12 - In the event of imposition by the Central Bank of Brazil on the issuing institution of restrictions on the distribution of dividends or other results related to shares, quotas, or quota shares eligible for Principal Capital, the payment of the remuneration of this Financial Letter will be suspended in the same proportion as the imposed restriction.

13 - The payment of the remuneration of this Financial Letter will be suspended in the same percentages as those referred to in Art. 9, § 4, of Resolution No. 4.193, of March 1, 2013, or any that may succeed it, in the event of:

I - the issuing institution presenting insufficiency in meeting the Principal Capital Add-on; or

II - the payment resulting in non-compliance with the minimum requirements for Principal Capital, Level I, and PR.

14 - The remuneration of this Financial Letter not paid due to the provisions of item 11 and the remuneration for the suspension period implemented due to the provisions of items 12 and 13 are considered extinguished.

15 - The credit right represented by this Financial Letter will be converted into shares eligible for the Principal Capital of the issuing institution, as defined in items 17 to 19 of this Core, at the value corresponding to the balance calculated in Level I of PR, in the following situations:

I - disclosure by the issuing institution, in the manner established by the Central Bank of Brazil, that its Principal Capital is at a level below 5.125% (five and one hundred twenty-five thousandths percent) of the amount of risk-weighted assets (RWA), calculated in the manner established by Resolution No. 4.193, of 2013, or any that may succeed it;

II - signing of a commitment to inject resources into the issuing institution, if the exception provided for in Art. 28 of Complementary Law No. 101, of May 4, 2000, applies, which allows the use of public resources to assist institutions of the National Financial System through specific law;

III - decree by the Central Bank of Brazil of a temporary special administration regime or intervention in the issuing institution; or

IV - determination by the Central Bank of Brazil, according to criteria established in specific regulation issued by the National Monetary Council.

16 - The conversion referred to in item 15 will not occur in the cases of revision or republication of documents that have been used by the issuing institution as a basis for disclosing the proportion between Principal Capital and the RWA amount, provided in item 15, I.

17 - The issuing institution has all necessary internal authorizations for the issuance of this Financial Letter as Capital Complementar and for the shares to be used in the conversion referred to in item 15, including the authorized capital referred to in Art. 168 of Law No. 6.404, of December 15, 1976, in a value sufficient to cover any capital increase resulting from the conversion.

18 - The conversion referred to in item 15 will occur prior to the actual entry of resources related to the situation provided in item 15, II, observing the maximum limit of shares to be delivered to the respective holders, informed in the constitutive registration of this Financial Letter.

19 - The issuing institution declares having assumed in writing, before the Central Bank of Brazil, the commitment to preserve the authorized capital limit referred to in Art. 168 of Law No. 6.404, of 1976, necessary for eventual conversion, in the manner of items 15 and 17 of this Core, during the period in which the credits represented by the instruments remain due.

20 - The credit right represented by this Financial Letter will be permanently extinguished if the holder waives the right to receive the shares subject to the conversion referred to in item 15.

21 - The occurrence of the situations provided for in items 11 to 16 will not be considered a default event or other factor that generates the acceleration of debt maturity in any legal transaction involving the issuing institution.

22 - The issuing institution declares having complied with the provisions regarding the shareholders' preemptive rights contained in Art. 15 of Law No. 12.838, of July 9, 2013, when offering this Financial Letter.

23 - The effectiveness of items 11 to 15 is conditioned on the validity of the Central Bank of Brazil's authorization to use the funds raised through this Financial Letter for the purpose of composing PR, so that it will cease in the event of cancellation of said authorization, which may occur, among other cases arising from regulation, in case of non-compliance with the terms of this Subordination Core, even if the acts or clauses causing the violation are deemed ineffective.

ANNEX 4

Subordination Core of Financial Letter issued for the purpose of composing Level II of Reference Equity, with provision for conversion of the credit right into shares eligible for the Principal Capital of the issuing institution

1 - Any clause of this Financial Letter or of another accessory document that is inconsistent with the requirements established by legislation and current regulation for the instrument to be eligible to compose Level II of Reference Equity (PR) and with the other clauses of this Subordination Core is considered ineffective.

2 - The amendment, alteration, or revocation of the terms of this Subordination Core and the other issuance conditions of the Financial Letter depend on prior authorization from the Central Bank of Brazil.

3 - The payment of this Financial Letter is subordinate to the payment of the issuer institution's other liabilities, except for the payment of the elements constituting the Main Capital and Supplementary Capital, in the event of the issuer institution's dissolution.

4 - This Financial Letter shall not be subject to guarantee, insurance, or any other mechanism that obligates or permits the payment or transfer of resources, directly or indirectly, from the issuer institution, an entity within the conglomerate, or a non-financial controlled entity, to its holder, in a manner that compromises the subordination status described in item 3.

5 - The purchase of this Financial Letter is not subject to financing, direct or indirect, by the issuer institution.

6 - The integration of the values related to this Financial Letter is carried out in cash.

7 - The repurchase and early redemption of this Financial Letter, even if carried out indirectly through an entity within the conglomerate or by a non-financial entity controlled by the issuer institution, are conditioned upon authorization by the Central Bank of Brazil, except in the cases provided for in Art. 5, § 6, and Art. 10, § 4, of Resolution No. 4,733, of June 27, 2019.

8 - Any clause of this Financial Letter or of another accessory instrument that provides for the variation of terms or remuneration conditions after its issuance, including due to fluctuations in the credit quality of the issuer institution, is considered ineffective.

9 - The credit right represented by this Financial Letter shall be converted into shares eligible for the Main Capital of the issuer institution, as defined in items 11 to 13 of this Core, at a value corresponding to the balance calculated at Level II of the Reference Equity (PR), in the following situations:

I - disclosure by the issuer institution, in the manner established by the Central Bank of Brazil, that its Main Capital is at a level below 4.5% (four and five-tenths percent) of the amount of Risk-Weighted Assets (RWA), calculated in the manner established by Resolution No. 4,193, of March 1, 2013, or by any regulation that succeeds it;

II - signing of a capital contribution commitment to the issuer institution, if the exception provided for in Art. 28 of Complementary Law No. 101, of May 4, 2000, applies, which allows the use of public resources to assist institutions of the National Financial System through specific legislation;

III - decree by the Central Bank of Brazil of a temporary special administration regime or intervention in the issuer institution; or

IV - determination by the Central Bank of Brazil, according to criteria established in specific regulations issued by the National Monetary Council.

10 - The conversion referred to in item 9 shall not occur in the cases of revision or republication of documents that have been used by the issuer institution as the basis for disclosing the proportion between the Main Capital and the RWA amount, as provided for in item 9, I.

11 - The issuer institution has all necessary internal authorizations for the issuance of this Financial Letter to compose Level II of its respective Reference Equity (PR) and for the shares to be used in the conversion referred to in item 9, including the authorized capital referred to in Art. 168 of Law No. 6,404, of December 15, 1976, in an amount sufficient to cover any potential capital increase resulting from the conversion.

12 - The conversion referred to in item 9 shall occur prior to the actual entry of resources related to the situation provided for in item 9, II, observed the maximum limit of shares to be delivered to the respective holders, as informed in the constitutive registry of this Financial Letter.

13 - The issuer institution declares having assumed, in writing, before the Central Bank of Brazil, the commitment to preserve the limit of authorized capital referred to in Art. 168 of Law No. 6,404, of 1976, necessary for any conversion, in the manner of items 9 and 11 of this Core, during the period in which the credits represented by the instruments remain due.

14 - The credit right represented by this Financial Letter shall be permanently extinguished if the holder waives the right to receive the shares subject to the conversion referred to in item 9.

15 - The occurrence of the situations provided for in items 9 and 10 shall not be considered a default event or other factor that generates the acceleration of debt maturity in any legal transaction in which the issuer institution participates.

16 - The issuer institution declares having complied with the provisions regarding the preemptive rights of shareholders contained in Art. 15 of Law No. 12,838, of July 9, 2013, at the time of the offer of this Financial Letter.

17 - The effectiveness of item 9 is conditioned upon the validity of the Central Bank of Brazil's authorization for the use of resources raised through this Financial Letter for the purpose of composing the Reference Equity (PR), such that it shall cease in the event of cancellation of said authorization, which may occur, among other regulatory hypotheses, in case of non-compliance with the terms of this Subordination Core, even if the acts or clauses causing the violation are deemed ineffective.