BCB Resolution No. 397 — Amends Resolution BCB No. 352 on accounting criteria for financial instruments and hedge accounting

BCB RESOLUTION NO. 397, OF JULY 3, 2024

Amends
Resolution BCB No. 352, of November 23, 2023, which provides for the concepts and accounting criteria applicable to financial instruments, as well as for the designation and recognition of hedging relationships (hedge accounting) by securities brokerage firms, securities distribution companies, foreign exchange brokerage firms, consortium administrators and payment institutions authorized to operate by the Central Bank of Brazil and on accounting procedures for the definition of cash flows of a financial asset as solely payments of principal and interest, the application of the methodology for calculating the effective interest rate of financial instruments, the establishment of provisions for losses associated with credit risk and the disclosure of information relating to financial instruments in explanatory notes to be observed by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

The Collegiate Board of the Central Bank of Brazil, in a session held on July 3 2024, based on arts. 9 of Law No. 4.595, of December 31, 1964, 9-A of Law No. 4.728, of July 14, 1965, 6 and 7, caput, item III, of Law No. 11.795, of October 8, 2008, 9, caput, items II and IX, letter “b”, and 15 of Law No. 12.865, of October 9, 2013, and 67, caput, items I, III and IV, of CMN Resolution No. 4.966, of November 25, 2021,

R E S O L V E
:

Art.
1º Resolution BCB No. 352, of November 23
2023, published in the Official Gazette of the Union on November 27, 2023, shall enter into force with the following changes:

“Art.
3º The financial instrument is characterized as a financial asset with a problem of credit recovery (problematic asset) when it occurs:

.........................................................................................................................” (NR)

“Art. 12. ....................................................................................................................

...................................................................................................................................

§ 1º ...........................................................................................................................

I

• recognize the difference in the result of the period for financial instruments
  measured at level 1 or level 2 of the fair value hierarchy, as per current regulation; or

.........................................................................................................................” (NR)

“Art. 51. ....................................................................................................................

...................................................................................................................................

§
4º When a financial instrument is characterized as an asset with a problem of credit recovery, all financial instruments of the same counterparty must, on the reference date of the balance sheet relating to the month in which the characterization occurred, be characterized as a financial asset with a problem of credit recovery, exceptionally allowing the non-characterization of a certain instrument that, due to its nature or its purpose, presents a significantly lower credit risk.

.........................................................................................................................” (NR)

“Art.
67. ....................................................................................................................

...................................................................................................................................

§
6º ...........................................................................................................................

I

• the financial asset is linked to a financial liability denominated in foreign
  currency or with an exchange rate variation clause; and

.........................................................................................................................” (NR)

“Art.
78. ....................................................................................................................

...................................................................................................................................

V

• the other financial assets originated as a result
  of renegotiation of the operations covered by items I to IV.

...................................................................................................................................

§
5º The provisions of this article do not apply to credit operations carried out within the scope of federal programs aimed at addressing economic crises, whose credit risk is assumed partially or fully by the Union, directly or through a guarantee fund or a financial institution controlled by it.

§
6º The provisions of item I of § 1º do not apply to personal credit operations with payroll deduction, without delay or with delay of up to fourteen days, for which the institutions mentioned in the caput must establish an additional provision of 0.5% (five tenths of a percent) of the gross book value of the operation.” (NR).

“Art.
80. The provision levels referred to in
this Section must be:

I

• observed individually by financial asset;

II

• reviewed, at least monthly, according to the criteria established by
  this Resolution.” (NR).

“Section
IIID Parameters for calculating expected losses

Art.
81-A. The institutions mentioned in art.
1, caput, that use the complete methodology for calculating expected losses associated with credit risk must, in the assessment of expected loss referred to in art. 40 of CMN Resolution No. 4.966, of November 25, 2021, and art. 40 of this Resolution, individually estimate the following parameters, in percentage terms:

I

• the probability of the instrument being characterized as an asset with a problem of
  credit recovery; and

II

• the expectation of recovery of the financial instrument.

Sole paragraph. The estimation of the parameters referred to in the caput must be done independently of the calculation of the value of the calculation base defined in art. 45 of CMN Resolution No. 4.966, of November 25, 2021, and in art. 45 of this Resolution.” (NR)

“Art. 82. ....................................................................................................................

...................................................................................................................................

§ 2º ...........................................................................................................................

...................................................................................................................................

II

• cover all institutions comprising the prudential conglomerate or, in the
  case of credit cooperatives, all credit cooperatives in the cooperative system; and

.........................................................................................................................” (NR)

“Art.
95-A. It is optional until December 31,
2026 to use the renegotiated effective interest rate to calculate the present value of the cash flows of the renegotiated contracts referred to in art. 22.” (NR)

“Art.
97-A. For the purpose of characterizing a financial instrument as an asset with a problem of credit recovery referred to in art. 3º, the restructuring of a credit operation carried out in the period from May 1 to December 31, 2024, due to the economic consequences derived from climatic events in the state of Rio Grande do Sul, is not an indicator that the respective obligation will not be fully honored under the agreed conditions, without it being necessary to resort to guarantees or to collateral, as provided for in art. 3º, § 2º, item II.

§
1º The provisions of the caput do not apply to the operations:

I

• already characterized as problematic assets on the date of restructuring; or

II

• with evidence of the counterparty's inability to honor the obligation under the
  new agreed conditions.

§
2º The institution must keep available to the
Central Bank of Brazil, for five years, the credit analysis documentation relating to the restructurings referred to in the caput.” (NR)

“Art.
97-B. The use of the complete methodology for calculating expected losses associated with credit risk is optional from the date of entry into force of this Resolution, by the institutions referred to in art. 50, caput, whose classification in S3 is provided for, according to specific regulation, to produce effects in the year 2025.” (NR)

“Art. 100.
It is optional for the institutions mentioned in art. 1, caput, item I, to prepare and disclose consolidated financial statements in accordance with the Accounting Standard of Institutions Regulated by the Central Bank of Brazil (Cosif) until the 2027 fiscal year, in addition to statements in the international accounting standard, as provided for in Resolution BCB No. 2, of August 12 2020.

.........................................................................................................................” (NR)

Art.
2º Resolution BCB No. 378, of May 13, 2024, published in the Official Gazette of the Union on May 14, 2024, is repealed.

Art. 3º This
Resolution enters into force:

I - on January 1,
2025, regarding art. 2º; and

II - on August 1,
2024, regarding the remaining provisions.

OTÁVIO RIBEIRO DAMASO
Director of Regulation