Central Bank Loans Linked to Fixed-Term Foreign Currency Deposits: Procedural Rules and Interest Rates

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 886 13/05/86

TO THE FINANCIAL INSTITUTIONS:

Ref: Circular ACTIVE OPERATIONS - OPRAC-1-
127. Loans from the Central Bank linked
to the taking of fixed-term deposits in foreign currency. Procedural rules and interest rates to be applied.

We address you in order to inform you that it has been decided to execute the first stage of the loan regime referred to in Communication "A" 725 of 25.7.85, Annex I, point 4., in accordance with the following rules:

1. Registered institutions may obtain loans from this Institution in accordance with point 4.1.1. of the aforementioned Communication, whose average use in each month may not exceed 10% of the monthly average of the daily balances of deposits (principal) recorded during the preceding month. The terms of the credits granted by the institutions shall be those in force for the operations of Communication "A" 12, Chapter I, section 1.5., and its amendments.

2. To submit their requests for funds, cancellation of loans and payment of interest, banks registered in the registry of institutions authorized to operate in the system for taking fixed-term foreign currency deposits shall follow the following procedure:

a) They shall send, once only, together with the first request for funds, the letter of guarantee -in original and two copies- the model of which is attached as Annex II of Communication "A" 725. Likewise, they shall send and keep updated a registry of signatures of the officials duly authorized to sign all documentation related to the movements of funds referred to in these rules.

b) For the amount of each loan in U.S. dollars requested, which is destined for the granting of credits to finance exports (section 4.1. of Annex I to Communication "A" 7"5", they must present to the Central Bank -Department of Exchange Operations- by 13.30 hours, Form 4095-A which may include more than one operation, accompanied by Form 2894 stating the detail of the documents and certificates given as guarantee and Form 4096 with the position of the institution referred to these loans.

Once the corresponding authorization from this Bank is obtained, they must arrange the exchange operation through the Department of Exchange Operators.

The foreign currency resulting from the loan from the Central Bank must be acquired from the beneficiaries of the credit by the intervening financial institutions, as financing of exports and simultaneously sold to the Central Bank, the latter operation being reflected in Form 4095-A.

c) At the maturity of the loans, the authorized institutions must send to the Central Bank (Department of Exchange Operations), by 13.30 hours, Form 4095-B, which must be numbered consecutively. The aforementioned form may include more than one operation.

They shall transfer to the account of the Central Bank opened in the Banco de la Nación Argentina - New York Branch- under the name "Communication "A" 725", the recoveries of credits granted to finance exports, using the foreign currency proceeds from such sales abroad. When dealing with operations processed through the Reciprocal Credit Agreements, they must transfer the free dollars ceded by the Central Bank as counterpart of the agreement dollars received for the payment of the export. In this case, Form 4095-B must be completed in its entirety.

When the foreign currency corresponding to the export has not been received and without prejudice to reporting such circumstance in the usual manner, the intervening banks shall resort to the Single Exchange Market to make the respective transfer.

If the export is not carried out within the authorized terms, payment shall be due, for the entire term of the loan, of an additional rate equivalent to the interest rate established for credit operations charged to the general clientele sublimit of the consolidated loan, for which purpose the Loan Update Index -Remaining Operations- (Communication "A" 185) shall apply. For these purposes, the equivalent in australes of the loan in foreign currency according to the exchange rate of the day of the crediting of the funds shall be considered as principal, processing Form 4098. Against this requirement they may access the Exchange Market to cancel the credit.

d) Accrued interest must be paid in U.S. dollars together with the cancellation of the respective loan. For this purpose the institutions must send Form 4097.

e) Within fifteen calendar days after the end of each calendar quarter they must send to the Department of Exchange Operations, the external auditor's opinion referred to in the last paragraph of section 4.7. of Annex I to Communication "A" 725, as amended by Communication "A" 75.

f) The interest rates that the Central Bank will charge for loans to authorized institutions and those that these may receive for the credits they grant, are the following:

i) Loans from the Central Bank: LIBO rate corresponding to 30, 60, 90, 120, 150 or 180 days, according to the term of the loan, which will be communicated by this Institution, plus the surcharge of one percentage point per year.

ii) Credits of authorized institutions: To the rate resulting from the preceding point, up to two percentage points per year may be added.

B.C.R.A. COMMUNICATION "A" 886 13/5/86

g) It is recalled that the general rules in force regarding credit policy, on the graduation of such support and on the splitting of the risk of loan operations, apply to the loans granted by the institutions (Communications "A" 439, "A" 467 and "A" 414 -Chapter II- and complementary).

3. Requests for funds may be made as of 19 May next, in the forms that this Bank will duly make available to the entities.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Oraldo N. Fernández
Manager of
Foreign Affairs and Exchange
Raúl V. Ibarra
Deputy General Manager